Many Texas residents experience financial hardships. However, not all of them need to risk losing some of their assets through the filing of a Chapter 7 bankruptcy. Instead, they may qualify to file a Chapter 13 bankruptcy in which most people retain most or all of their assets while reorganizing their financial lives and making payments on debts through a repayment plan.
Texas residents considering this debt relief avenue should know that it is more of a marathon than a sprint, which is one of the primary differences between Chapter 7 and Chapter 13. The repayment plan can last between three and five years depending on an individual's circumstances. Obtaining a thorough understanding of the process is crucial before deciding to file under this chapter of the Bankruptcy Code.
The repayment plan needs to address all of a person's debts. Each is given priority based on the type of debt. Priority debts such as taxes and child support come first and must be paid off or brought current through the plan. Secured debts such as a mortgage or vehicle loan come next, but do not necessarily have to be paid in full by the end of the plan. Unsecured debts such as credit cards and medical debt are at the bottom of the list and may not requirement repayment by the end and could be discharged upon successful completion of the repayment plan.
The above is a cursory and abbreviated explanation of the Chapter 13 bankruptcy repayment plan. How it applies to a particular individual could vary. Before anyone embarks on this journey, he or she may want to determine exactly how the process will apply to a particular situation and set of circumstances.