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Schertz Chapter 13 Bankruptcy AttorneyDebtors have multiple options for addressing debts through bankruptcy. For those who have secured debts such as a home mortgage or other loans where they wish to maintain ownership of the collateral, or in cases where a family’s income exceeds a certain threshold, Chapter 13 bankruptcy may be the best option. In these cases, the debtor will propose a repayment plan in which they will put their disposable income toward paying off as much of their debts as possible over a period of three or five years, and after completing all payments in the plan, they will receive a discharge of the unsecured debts that are remaining. However, debtors may be concerned about what will happen if they encounter financial difficulties that affect their ability to make these payments. In these situations, a debtor may qualify for a hardship discharge.

Eligibility for a Hardship Discharge

Typically, if a debtor does not make all of the payments in a Chapter 13 repayment plan, their bankruptcy case may be dismissed, and they will continue to owe debts to creditors. However, if a debtor becomes unable to continue making payments in their plan, they may ask the court to approve a hardship discharge, which will allow the remaining debts in the plan to be eliminated. To qualify for a hardship discharge, a debtor must meet the following requirements:

  • The debtor must be unable to complete their repayment plan through no fault of their own and due to circumstances that are out of their control. For example, a serious illness may have caused a person to be unable to work full-time, leading to a reduction in income and an inability to make payments. A debtor will usually need to show that the conditions that have affected their ability to complete the repayment plan are expected to be long-term or permanent rather than a short-term or temporary setback.

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Boerne Chapter 13 Bankruptcy AttorneyIf you have significant debts that have led to financial struggles for your family, you may be considering bankruptcy. If you want to be able to maintain ownership of your home, or if you want to avoid the repossession of a vehicle or other property, Chapter 13 bankruptcy may be the best option for you. In this type of bankruptcy, certain debts are grouped together in a repayment plan that will last either three or five years. After completing this plan, any unsecured debts that remain will be eliminated. As you prepare to file for bankruptcy, you will want to understand how your repayment plan will be calculated.

Creating a Repayment Plan in a Chapter 13 Bankruptcy

When you file for bankruptcy, you will be required to provide documentation detailing information such as a list of all of your creditors, the total income you earn and how often you are paid, an inventory of all of your assets, and details about your regular expenses. This information will be used to determine your disposable income, or the amount that is available to pay debts after covering your living expenses.

Your disposable income will be determined by taking your income and subtracting all reasonable expenses that are necessary for the support of yourself and your dependents. Applicable expenses include the costs of food, clothing, utilities, medications, or other forms of medical care, taxes, and transportation expenses such as gas, car insurance, and vehicle maintenance. You can also set aside up to 15 percent of your gross income for charitable contributions. Your projected disposable income will be any amount that remains after deducting expenses, and this amount will be put toward your Chapter 13 repayment plan.

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Texas chapter 7 lawyer, Texas chapter 13 attorneyBankruptcy is often seen as a last-ditch effort to overcome the financial burden that you may be experiencing. While this is typically the case, the level of debt that one may be in can vary greatly depending on their circumstances. Some may have no income and are struggling to pay basic bills, while others may have a steady income but have found themselves buried by exponential medical or credit card expenses. There are two common ways that Texans can file for bankruptcy: Chapter 7 and Chapter 13 bankruptcy. By looking at your unique circumstances, you can determine what type of bankruptcy filing is appropriate.

Chapter 7

When imagining what filing for bankruptcy looks like, people often imagine something along the lines of Chapter 7 bankruptcy. Also known as “liquidation bankruptcy”, this form of bankruptcy has the trustee sell the debtor's property and use the money collected to pay off their debts, as close to the total amount as possible - all remaining debts will be forgotten. This form of bankruptcy may seem preferable to some, since the process only takes about six months and some debts may be forgotten, but it is not available to all debtors. If the debtor’s income falls below the state’s median household income, which in Texas is $59,570, he or she is eligible to file for Chapter 7 bankruptcy. The debtor will not lose all of his or her assets during the bankruptcy process, since some personal property can be claimed exempt from the process.

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bankruptcy-typeIn the United States, there are many different types of bankruptcies, some being for businesses, government sectors or individuals. If you are an individual filing for bankruptcy, the two most common types of bankruptcies that are filed are either Chapter 7, which is a liquidation bankruptcy, or Chapter 13, which is a reorganization bankruptcy. Each type of bankruptcy has its advantages and disadvantages, along with different sets of criteria to qualify for each type of bankruptcy. If you are unable to pay your bills each month or you are struggling to make ends meet, bankruptcy may be in your best interest. Choosing the right type of bankruptcy for your situation can be the key to your financial success.

Chapter 7 Basics

A Chapter 7 bankruptcy is also known as liquidation bankruptcy. This is because all of your “unnecessary” assets will be liquidated to help pay off some of your debts before your debts are forgiven. Most unsecured debts, such as credit card debt, will be discharged in a Chapter 7 bankruptcy, meaning you will no longer be responsible for paying them. It takes roughly three to four months to complete a Chapter 7 bankruptcy, which is a relatively short time frame.

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TX bankruptcy lawyerThere is more than one type of bankruptcy, although Chapter 7 and Chapter 13 bankruptcies are the most common. In a Chapter 13 bankruptcy, your attorney and a team of other professionals are able to help you develop a repayment plan to pay back your debts. The repayment plan lasts for three to five years, depending on a variety of circumstances. Chapter 13 bankruptcies can be beneficial to individuals because it allows you to keep certain assets, such as your vehicle or your home. In a Chapter 13 bankruptcy, certain debts must be repaid before other debts.

Priority Debts

Priority debts are exactly what they sound like -- priority over other debts. These debts must be included in any repayment plan you enter and the plan must make sure that your priority debts are paid off first and in full. Typically priority debts include:

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