In bankruptcy, a chapter 13 filing is also called reorganization. Generally, it is an option for debtors to make a deal with creditors to repay debt in a 3-5 year timeframe. Unlike chapter 7 filings, chapter 13 bankruptcy clients will not be discharged of their debt completely, but they also will not lose assets like property during the course of filing.
A Bryan bankruptcy attorney can advise you on whether filing under chapter 13 is a good option for you. Income level has to be above a certain point to prove to the court that payments can be paid on time. If a debt total is too high, that may also render a person ineligible to file for chapter 13.
There are two types of debt that are considered in a chapter 13 filing, secured and unsecured. Secured debt includes mortgages and car payments and are a priority to repay. A repayment plan will automatically budget to pay off these debts first. Unsecured debt, medical and credit card bills, will be repaid with any disposable income available after the secured debt is paid.
On occasion, a situation arises that renders the debtor unable to complete the repayment plan as promised. In such a case, the court may decide to restructure the plan to make it easier to accommodate or it may rule to discharge the debt completely.
Under the law, student loans and any support obligations you may have are not eligible for discharge under a chapter 13 filing. In some cases, any debt that is covered by a repayment plan may be reduced significantly.
All of these considerations are taken on a case by case basis, making consulting with a bankruptcy attorney prior to making any decisions a vital part of the process. An attorney will be able to help you determine the best course of action for your situation.