In a Chapter 7 bankruptcy, the trustee can potentially sell your non-exempt property and give the money to your creditors. This almost never happens in Texas, where most property is exempt. However, if you do have non-exempt property, you can keep such property by filing a Chapter 13 reorganization plan. If you have enough income left over to make some payment toward your debts after you meet your monthly living expenses, the law requires you to file a Chapter 13 bankruptcy reorganization plan instead of a Chapter 7. When you file for reorganization, you are given a three year or a five year plan to make monthly payments towards your debts. You will only receive a discharge when you have successfully completed your payment plan through the trustee.
What happens to your property?
You can keep your property, such as your home or your car. If you jointly owe a debt, such as with your wife/husband, your Chapter 13 bankruptcy also protects that person from creditors trying to collect the debt. As long as you are making your monthly payments to the bankruptcy trustee, and those creditors are receiving something, they can’t try to get more money from your co-debtor.
At the end of your three-year or five-year reorganization plan, you might still owe your creditors some money. Your monthly payments from your extra income may not have been enough to pay everyone all that you owe. When this happens, your Chapter 13 bankruptcy erases the balance of your debt. Your creditors have to accept that, because they received something rather than nothing, as they would have if you had been eligible for a Chapter 7 bankruptcy instead.
The law surrounding Chapter 13 personal bankruptcy is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. For more detailed, specific information, please contact a bankruptcy lawyer. You may contact me at 817-732-7590 or through E-mail or by completing the Free Case Evaluation. The Law Office of Michael P. O’Donnell is here to assist you