How to Know If You’re Eligible for a Chapter 13 Bankruptcy in Plano, TX
Written by Robert DeMarco
Knowing if you are eligible for a Chapter 13 Bankruptcy in Plano, TX, can be difficult. The bankruptcy laws are complicated, and it is easy to make mistakes that could end up costing you money. Despite the stigma surrounding bankruptcy, it may be an option for those struggling to pay off their debts. In order to know if you’re eligible for Chapter 13 bankruptcy, there are a few factors that need to be considered. To find out more about eligibility requirements and how this type of bankruptcy works, continue reading below!
How to Know If You’re Eligible for a Chapter 13 Bankruptcy in Plano, TX
If you’re like many Americans, the chances are that you’ve found yourself drowning under an insurmountable amount of debt with no apparent way out! Fortunately, there is hope – Chapter 13 Bankruptcy can help! A Chapter 13 Bankruptcy allows individuals to set up a payment plan with creditors to pay off debts.
What is a Chapter 13 bankruptcy?
Chapter 13 bankruptcy is a type of debt relief that allows you to keep your property while repaying some or all of your debts over time. This repayment plan can last up to five years, and during this time, creditors are not allowed to force collections like wage garnishments, bank levies, etc.
What is Chapter 13 bankruptcy used for?
Chapter 13 bankruptcy has a number of uses. It can be used to reorganize your finances and pay off debts like:
– Unsecured debts like personal loans or credit cards
– Medical bills (not including those incurred before filing) and more.
Gaps in the plan cannot exceed 60 months, but you do not need to use all five years if that would work against you. A few instances where such gaps may occur include:
– If your income changes during this time, allowing you to repay more than was initially planned, possibly
– If there is an unforeseen increase or decrease in expenses over the course of these five years – This will vary from case to case depending on what exactly causes it though
– If unexpected changes happen like an illness or injury that affects your ability to work
For these reasons, it is essential to work with a bankruptcy attorney in Plano so that your Chapter 13 plan is tailored towards your specific needs.
What are some benefits of filing for Chapter 13 bankruptcy?
Some of the benefits include being able to:
– Pay off more than you could through an alternative like debt consolidation or credit counseling (at least in part)
– Stop wage garnishments and other collection efforts by creditors until after the case has been resolved
– To protect yourself from repossession if you own any real estate property – This includes refinancing options as well, even though they will likely come at a higher interest rate since lenders know about your impending inability to make payments on time due to this status change. Besides that, there are no other downsides to filing for Chapter 13 bankruptcy.
Chapter 13 Bankruptcy: How Do You Know If You’re Eligible to File?
In Plano, TX, Chapter 13 bankruptcy has its own set of eligibility requirements, which include the following:
Chapter 13 debtors must be individuals.
To file under Chapter 13, you can’t be a business entity such as a corporation or limited liability company (LLC). You also can’t rely on your creditors to voluntarily dismiss any lawsuits against your LLC that were filed before the date of filing. If they’re accepted by this deadline and if it’s found that you should’ve known about them, then there could be severe consequences.
The debtor can’t have more than $1,257,850 in secured debt.
This is the maximum amount allowed under federal law when determining whether an individual qualifies for Chapter 13 bankruptcy protection.
The debtor cannot owe more than $419,275 in unsecured debt.
Those who want to use their home equity as part of a repayment plan should note that there are separate limits on how much they’re able to borrow against it: no more than $100,000 or 60 percent of its value (whichever is less). These are the limits set by Texas state law. The lower limitation applies to individuals filing alone; married couples who file together cannot owe more than this amount combined (i.e., each spouse must meet the above criteria independently).
In order to qualify, the debtor must have a regular income.
The court looks at what’s known as “regular” income in determining whether an individual qualifies for Chapter 13 bankruptcy protection (i.e., it doesn’t matter how much total monthly debt you owe; all that matters is whether there are some sources of funds available consistently). In other words, this means that you’re not considered eligible if your only source of money comes from social security benefits or unemployment insurance. To meet these requirements, you typically need to be employed and make what’s known as “substantial gainful activity.” This amount varies depending on where the application is filed but can be found through research online or by consulting with your bankruptcy attorney before filing.
The debtor must have filed all tax returns for the last four years.
If you haven’t done so, then Chapter 13 bankruptcy won’t be an option. This requirement applies even if current income isn’t required as part of your application. Just note that it has to include what was earned by anyone who lives with you or claims you as a dependent on their taxes (i.e., individuals related through marriage, blood or adoption) and not just by yourself alone! You can talk to your Chapter 13 bankruptcy lawyer about filing delinquent returns if this is a problem; they may also recommend that you take advantage of any other payment options available through the Internal Revenue Service (IRS).
The debtor must have lived in Plano, TX, for at least three months before filing.
It doesn’t matter where they live when applying; what matters is that they’ve been domiciled within these boundaries during this period. You’ll also need to meet certain federal requirements related to your residence: it has to be an actual home rather than just property that you own, and it must be your primary place of residence. In other words, this means that renting an apartment or staying at a hotel on occasion doesn’t make the property ineligible for Chapter 13 bankruptcy protection; however, if you live elsewhere most of the time (e.g., with family) or otherwise don’t use it as your regular place to call “home.” Plano’s district court will reject the application since there are no ties to keep you rooted in its community.
Chapter 13 can’t be used if there are no assets available.
Even though individuals may not own much or anything valuable in its area when filing for bankruptcy relief, these rules don’t apply if they’ve exhausted all of their resources. If this is the case, then you’ll need to file for Chapter 11 (which doesn’t require as much money) or Chapters 12 or 15 instead; otherwise, your application will be rejected by the court since there’s no chance that it could ever work out in a way where creditors would receive anything back through repayment.
Chapter 13 bankruptcy cases must be filed under the correct chapter.
Individuals who want to use Plano’s district court can do so only after filing one petition with another option included within its jurisdiction: Chapter 12 focuses on family farmers and fishers. In contrast, Chapter 14 is intended to be used by financial institutions in severe financial difficulties and whose failure would have a significant impact on the US economy. However, it is not currently enacted into US law.
The debtor cannot have recently filed for bankruptcy relief under another chapter.
The court will only accept the application from individuals who’ve never previously submitted a petition for any other type of personal bankruptcy. This is because re-filing within these guidelines would be considered an abuse of this system, and it’s one of several red flags that trigger immediate disqualification if discovered during due diligence by the judge presiding over your case in Plano TX.
A person must also not have been convicted within the past 180 days.
No matter how many times you file Chapter 13 or what else you’re doing with your life at present, there are certain things that will result in automatic rejection: committing fraud or embezzlement against creditors through transferring assets before filing under this chapter, not disclosing certain assets during the process, and failing to pay taxes that are owed.
The debtor must also prove that they can afford the payments on a Chapter 13 bankruptcy repayment plan.
It’s not enough to meet the income eligibility threshold because this still doesn’t give lenders any assurance about how much money will remain available for allocation towards their claims after factoring in all monthly expenses.
Any required payments must be able to be made through paycheck deductions.
If you’re self-employed or receive income that’s not subject to wage garnishment, then this isn’t an option for meeting the financial eligibility requirement under Chapter 13 bankruptcy protection. It would need to come from another source (e.g., a tax refund or an inheritance) and, even though it’s not ideal, you could still move ahead with the process without this feature if necessary.
Individuals who work in Plano must be able to prove that they’re employed.
Under all types of bankruptcy cases (and certain other forms of debt relief), this is a requirement because individuals can’t file petitions if they’re unemployed or retired. For this reason, it’s not possible to qualify for Chapter 13 bankruptcy protection without proof of income because the court would never accept your petition in Plano.
The debtor cannot have certain types of debts that are not dischargeable in bankruptcy.
For example, education loans or tax liabilities can never be discharged through Chapter 13 bankruptcy.
If you’re considering filing for Chapter 13 bankruptcy, it’s essential to know how this type of debt relief works and what your options are. You need your bankruptcy lawyer’s help if you want to know whether or not you qualify for Chapter 13 bankruptcy relief in Plano, TX, since these rules can be complicated to understand and often require expert guidance. Contact Demarco Mitchell, PLLC, today! We can help you determine if Chapter 13 is right for you.
What Happens if You Qualify for a Chapter 13 Bankruptcy?
When you qualify for Chapter 13 bankruptcy, you are allowed to pay back your debts over three to five years. You will be able to keep all of your property, and on top of that, you won’t have any more unsecured debt hanging over your head. When it’s time for creditors to receive their payments during the Chapter 13 bankruptcy repayment plan, they’ll only receive a portion compared with how much they would get if filing under Chapter 11 or even Chapter 12 bankruptcy.
What Happens When You Don’t Qualify for a Chapter 13 Bankruptcy?
If an individual doesn’t have enough income to be eligible for chapter 13, it might make sense to look into trying out chapter 11. It will depend on your situation and what option best fits. For example, if you are filing because of taxes that were never filed in time due to negligence, this could potentially be discharged in chapter 11 so long as there was no fraud involved. Individuals who garnished wages should also consider whether they would benefit from filing under chapter 13 versus another type of bankruptcy like chapter 7. Filing under chapter 13 bankruptcy will stop the garnishment.
There are three main reasons you might not be eligible for a Chapter 13 Bankruptcy: Not making enough money, Not having nonexempt assets, and Having too much-secured debt.
If the Texas bankruptcy petition is denied or dismissed, creditors can continue pursuing debt collection against you.
Chapter 13 bankruptcy is a great way to make a fresh start and reorganize your debts. Bankruptcy isn’t something most people want to think about until they’ve reached the point where there aren’t any other options left for them. If none of these reasons disqualify an individual from filing, then I would highly recommend sitting down with a bankruptcy lawyer in Plano, Texas, so they can determine whether Chapter 13 will be best suited based on their circumstances and financial position.
Bankruptcy Lawyers in Plano, Texas
Are you struggling with debt? If you are, then it’s time to take action. You can get rid of your debts and start fresh by filing for Chapter 13 bankruptcy. We offer a free consultation so call us today! Demarco Mitchell, PLLC, will help you understand the process and make sure everything goes smoothly so that you don’t have to worry about anything but getting back on track financially.
Call our office now at (972) 578-1400 to schedule an appointment with one of our experienced attorneys as soon as possible! Don’t let your financial problems drag on any longer than they need to – contact us today! The sooner we begin working together, the better off you’ll be in the long run.
Related Articles
Related
Chapter 7 Attorney: A Guide to Navigating Bankruptcy and Choosing the Right Legal Representation
Chapter 7 Attorney: A Guide to Navigating Bankruptcy and Choosing the Right Legal Representation Are you considering filing for Chapter 7 bankruptcy? Navigating through the complexities of bankruptcy law can be overwhelming, but with the help of a knowledgeable...
Navigating Chapter 7 Bankruptcy in Texas: Key Roles of a Texas Bankruptcy Lawyer and When to Consult One
Navigating Chapter 7 Bankruptcy in Texas: Key Roles of a Texas Bankruptcy Lawyer and When to Consult One Are you grappling with overwhelming debts and contemplating bankruptcy as a possible way out? Are you unsure about the proceedings and when to take that pivotal...
Understanding the Different Types of Bankruptcy for Individuals in Texas
Understanding the Different Types of Bankruptcy for Individuals in Texas If you're struggling with debt and considering bankruptcy as a solution, it's essential to understand the different types of bankruptcy available for individuals in Texas. At DeMarco Mitchell,...