How Has Your Experience Been In Practicing Bankruptcy Law?
I am currently a solo practitioner, a one-man firm. I have been practicing bankruptcy law since 1980. The one thing I’ve learned in the 36-plus years of practicing is that people go through ups and downs, along with the country.
Almost everybody that I know of has had problems, and I represent people across the spectrum, from lawyers and doctors, to teachers and plumbers. So financial problems don’t just affect one type of person; they affect everybody.
What Is A Chapter 13 Bankruptcy Under Texas State Law?
A Chapter 13 bankruptcy, to put it in layman’s terms, is basically called re-organization. It falls under federal law, and it demonstrates to the bankruptcy court how you will pay off some of your past due and current debts, generally over three to five years. The important thing about this type of bankruptcy proceeding is that it allows you to keep your property, including your home and your car, which might otherwise be lost, as long as you can make payments to your creditors.
In most cases, the payments must be equal to your regular payments on your mortgage or car, along with some extra payments to catch up on the amount you’re behind. For example, if you own a home and you’re in danger of losing it because of financial problems, a Chapter 13 can help you keep it and help you catch up if you’re behind on your payments. If you have property which is not exempt, sometimes you can even keep that. So a Chapter 13 bankruptcy has its purpose, and it can serve people well if they need it.
What Are The Major Differences Between A Chapter 7 And A Chapter 13 Bankruptcy?
The major difference is in a Chapter 13 you pay back some or all of your debts even if they’re unsecured whereas a Chapter 7 discharges or wipes out all of your unsecured debt, such as credit card debt, medical bills, etc., which are typically unsecured. They can be liquidated or wiped out in a Chapter 7. In a Chapter 13, you pay a portion of your disposable income over three to five years to satisfy your secured debt in full and some of your unsecured bills. So, that’s the major difference. With a Chapter 13, you determine your disposable income by subtracting your constant fixed monthly living expenses from your income and use this money to pay off your debts.
For example, let’s say you have $500 left over each month, after paying for your utilities, food and other necessary living expenses: you would use that money to pay the trustee $500 each month for the length of the plan, and the trustee, in turn, pays your bills off that are included in the plan. So Chapter 13 is a payback plan so you can keep some of your property or catch up on paying for it; a Chapter 7 just allows you to keep your exempt property, but you are wiping out all the unsecured bills that you cannot afford to pay. That’s really the main difference. There are many other differences in the plans, but that’s the main one.
What Kinds Of Debt Are Typically Dischargeable In A Chapter 13?
All unsecured debt can be discharged, which means wiped out, or you can pay a portion of the amount without paying the entire amount. Generally, unsecured debt includes credit card debt and medical bills; debt that is not forgiven or can’t be discharged is typically child support, alimony, criminal fines and recent income taxes. These are debts that are not dischargeable by operation of law, which means you have to either continue paying them or pay them back in full.
For more information on Chapter 13 Bankruptcy In Texas, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (210) 734-5725 today.
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