Individuals in Texas who are filing for bankruptcy will usually file either a Chapter 7 or Chapter 13. With a Chapter 7 bankruptcy, a person may discharge most debts. An individual can keep any essential property, although assets he or she does not need may be sold to pay off creditors.
In a Chapter 13 bankruptcy, a person pays off debts to creditors over a period of three to five years. This may allow an individual to keep certain types of property, such as a home or a vehicle. However, the process of creating a repayment plan can be a complex one. First, the person’s total income is calculated. In addition to wages, this can include Social Security payments, alimony and more. An individual’s expenses, such as rent and utilities, are then calculated, and what is left is considered disposable income that may be used for repayment. If the person’s income varies, this is accounted for in structuring the payment plan. The monthly payments may periodically change to reflect this.
The debts are then prioritized. Certain types of debts are supposed to be paid first, including wages owed to people, some types of taxes, alimony and child support. The person must catch up on house and car payments to keep those assets. Certain other debts may be discharged at the end of the payment period.
People who are struggling with debt may want to contact an attorney and discuss their options as well as what type of personal bankruptcy they may qualify for. Filing for bankruptcy puts an immediate stop to creditor actions, ranging from phone calls and home foreclosure to court cases and more. Some debts cannot be discharged in either a Chapter 7 or Chapter 13 bankruptcy. This includes child and spousal support payments, legal judgments and most student loans.