What is Chapter 13 Bankruptcy?

People above the median income must file under Chapter 13 unless most of their debt is business debt.  It is presumed that if someone over-income files Chapter 7, they are abusing the system. For people below the median income, there is no presumption of abuse. 

A typical Chapter 13 lasts anywhere from three to five years.  

To stay on top of the latest fees, visit the websites for bankruptcy courts in Texas and look for the fee schedules.  

• United States Bankruptcy Court for the Eastern District of Texas, fee schedule
• United States Bankruptcy Court for the Northern District of Texas, fee schedule
• United States Bankruptcy Court for the Southern District of Texas, fee schedule
• United States Bankruptcy Court for the Western District of Texas, fee schedule

Chapter 13 debtors can ask to pay the filing fee in installments. The form for applying to pay the filing fee in installments is at Application for Individuals to Pay the Filing Fee in Installments.  

In Chapter 13, the debtor must file a plan to repay creditors and make monthly payments to the Chapter 13 trustee as the plan requires. If the debtor doesn't make the required plan payments, the entire case will be dismissed, and none of the debts will be discharged (legally eliminated).  

Chapter 13 does not require the debtor to pay every creditor in full. Sometimes it's possible to pay just a percentage (even 0%) to some or all unsecured creditors and even pay less than 100% (called a cramdown) to some secured creditors. 

The amount that a Chapter 13 debtor must pay the trustee per month under the Chapter 13 plan is determined by two factors: 

1. How much disposable income (money available for the debtor to pay the trustee after reasonable, necessary expenses are budgeted) the debtor has to pay to the trustee each month, and
2.  How much the debtor must pay to meet the minimum confirmation requirements based on the types of creditors and the amount of debt owed to those creditors.