The problem many of us in Texas have goes beyond paying the mortgage. We have medical bills, credit card bills, car payments, tuition fees, regular weekly expenses which simply will not go down. So what are your options? Recently on Higgins And Associates we went over filing Chapter 7 bankruptcy in Texas for unsecured debts – monies owed on your credit card, outstanding medical bills, etc. This guide will focus on filing Chapter 13 at a time when it can benefit you the most.
What are unsecured debts?
Unsecured debts are monies owed on items you stand to lose if you don’t pay – like your home, car, boat, valuables like jewelry, entertainment items like an expensive TV, etc. These may be taken if you default on the bill.
What about your home?
If you fall behind in mortgage payments, you have options even after the foreclosure process begins. But, and this is important, if you file after the process begins you can only buy time to find a new residence. The Texas Homestead Exemption protects your home from being taken for most debts, except your mortgage lender. The lender can take the home if you default on the payments. On the other hand, if you file Chapter 13 bankruptcy before the foreclosure begins, you will at a minimum buy yourself some time, and if you can afford to continue making some payments, you can likely keep your home.
With Texas exemptions, you can keep up to $30,000 in assets as an individual or $60,000 as family when filing bankruptcy. This includes your car, but other items too, like jewelry or your TV.
Are you eligible?
According to USCourts.gov, “Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual’s unsecured debts are less than $360,475 and secured debts are less than $1,081,400.”
How much will Texas bankruptcy cost?
To file Chapter 13 bankruptcy with a Texas court, you pay a $274 filing fee. (If you file Chapter 7, the fee is $299.) Before this, you want to consider whether or not you need a professional bankruptcy lawyer. Unless you are a bankruptcy lawyer, you should hire one. The fees vary, but usually amount to $1,000 to $2,000. If you have a lot of secured debt, and stand to lose your valuable home, this fee is minor in comparison to the benefits of filing.
Why not Chapter 7?
You may get more benefits from Chapter 7, but if you make higher than the median income of Texas, you won’t be eligible. However, if you’re unemployed and/or have little income, you may not be able to afford a repayment plan. While Chapter 13 has some advantages, you have to pay your debts. If you have both options, ask your lawyer what would be best for you.