What is Chapter 13?

Ask Our Dallas-Ft. Worth-Austin-Houston Lawyers

If you are about to lose your house or car, a Chapter 13 bankruptcy might save it. The bankruptcy attorneys of Fears | Nachawati can stop many foreclosures -- but we need at least a week before the sale to file all the documents. Contact us immediately to discuss whether a Chapter 13 bankruptcy can work for you.

How Chapter 13 Works

Chapter 13 bankruptcy is known as the "wage earner's plan" meant for people who make a reasonable income but are overwhelmed by debt and late on house or car payments. The bankruptcy court consolidates all of your debts, and you are put on a strict schedule of payments for 3-5 years. You make payments to a trustee, who then pays your creditors. At the end of that period of time, any remaining debts are "discharged," or wiped clean.

Keeping Your Property

The main advantage of a Chapter 13 over a Chapter 7 bankruptcy is that you get to keep much of your personal property. In Texas, this includes a home and a vehicle for each adult in your household of driving age. It also includes bank accounts, retirement accounts, and other assets that are deemed exempt.

Lower Payments

When going through Chapter 13 bankruptcy, you have to keep making payments. But for many secured debts, which include mortgages, car payments, and anything else that involves collateral, you can reschedule payments so that they are lower each month.