Filing Chapter 13 starts with a credit counseling course, followed by a petition, schedules and a repayment plan filed with the bankruptcy court. Plan payments to the trustee begin within 30 days of filing, you attend a meeting of creditors, and the judge holds a hearing to decide whether to confirm your plan. You then make plan payments for three to five years before you can receive a discharge.
That is the short version. Each step has its own paperwork and deadlines, and missing one can put a case at risk. Below is how the process usually unfolds for people in Northeast Texas who file in the U.S. Bankruptcy Courts, and what you can do to be ready for each stage.
Who Chapter 13 Is Built For
Chapter 13 is designed for individuals with regular income who want to keep their property and pay what they reasonably can over time. It is often considered when someone is behind on a house or a car and needs time to catch up, or when income is too high to qualify for Chapter 7.
The Chapter 13 bankruptcy help page explains what a plan can cover and how repayment works. If you are still deciding which chapter fits, our guide to Chapter 7 vs Chapter 13 bankruptcy in Texas walks through the main differences.
Step 1: Complete Credit Counseling Before You File
Before a Chapter 13 case can be filed, you must receive credit counseling from an approved credit counseling agency within 180 days before filing. The agency gives you a certificate when you finish, and that certificate is filed with your case.
This step is easy to overlook, but a case filed without it can run into problems. Ask your attorney which approved agencies are available and keep a copy of your certificate.
Step 2: Gather Your Financial Documents
A Chapter 13 plan is built from your real numbers, so the more complete your records are, the smoother the filing. Most people are asked to gather:
- Recent pay stubs and other proof of income
- Recent federal tax returns
- Bank account statements
- Mortgage, car loan and other secured debt statements
- Credit card, medical and personal loan statements
- Collection letters, lawsuit papers or garnishment notices
- A realistic list of monthly household expenses
Bring what you have to your consultation, even if it is incomplete. Gaps can be filled in later, but your attorney needs a clear picture before the plan is drafted.
Step 3: File the Petition, Schedules and Plan
The case officially begins when the petition is filed with the bankruptcy court. Along with it come schedules that list your assets, debts, income and expenses, plus a statement of financial affairs.
The repayment plan must be filed with the petition or within 14 days after the petition is filed. The plan explains how much you will pay, for how long, and how each type of debt will be treated. Mortgage arrears, car loans, certain tax debts and unsecured debts are each handled under their own rules.
Step 4: The Automatic Stay Begins
Filing starts an automatic stay that stops most collection actions. That can include foreclosure sales, repossessions, wage garnishments, collection lawsuits and creditor calls. Some actions may still proceed in limited circumstances, so it is important to review your situation before you file.
Chapter 13 also includes a co-debtor stay. For many consumer debts, creditors are generally barred from collecting from a person who is liable on the debt along with you, such as a co-signer, while the case is active. If you are facing the loss of a home, our article on whether bankruptcy can stop foreclosure in Texas covers that situation in more detail.
Step 5: Start Plan Payments Within 30 Days
Within 30 days after filing, you must start making plan payments to the Chapter 13 trustee, even though the court has not approved the plan yet. Many people are surprised by this timing, so it helps to plan your budget around that first payment before you file.
Making these early payments on time shows the trustee and the court that the plan is workable. Falling behind this early can lead to an objection or a motion to dismiss.
Step 6: Attend the Meeting of Creditors
Between 21 and 50 days after filing, the Chapter 13 trustee holds a meeting of creditors, often called the 341 meeting. You must attend and answer questions about your financial affairs under oath. Your attorney attends with you.
Creditors may attend and ask questions, but the trustee usually leads the meeting. Questions typically focus on your income, expenses, property and whether the information in your schedules is accurate. Bring the identification your attorney tells you to bring and review your paperwork beforehand.
Step 7: The Confirmation Hearing
No later than 45 days after the meeting of creditors, the bankruptcy judge must hold a confirmation hearing and decide whether the plan is feasible and meets the requirements of the Bankruptcy Code. The trustee or a creditor may object to the plan, and the plan can sometimes be amended to resolve those objections.
Once the plan is confirmed, the trustee distributes your payments to creditors according to its terms. Confirmation is a major milestone, but it is the start of the repayment period, not the end of the case.
Step 8: Living Under the Plan
How long the plan lasts depends largely on income. Under federal guidance, if your current monthly income is less than the applicable state median, the plan will be for three years unless the court approves a longer period. If it is greater than the state median, the plan generally must be for five years.
Life does not stand still for three to five years. Job changes, medical problems or a new expense can affect your ability to pay. A plan can sometimes be modified, but if payments are not made, the court may dismiss the case or convert it to a Chapter 7 liquidation case. The earlier you tell your attorney about a change, the more options you are likely to have.
Step 9: Financial Management Course and Discharge
Before you receive a discharge, you must complete a personal financial management course. After you finish your plan payments and required certifications, remaining eligible unsecured balances can be discharged. That discharge is the fresh start Chapter 13 is designed to provide.
Chapter 13 FAQ
Do you pay back all your debt in Chapter 13?
Not always. Debts you are keeping, such as a mortgage or car loan, and certain priority debts are generally addressed through the plan. Unsecured creditors may receive only part of what they are owed, depending on your income, expenses and property.
What is the downside to filing Chapter 13?
Chapter 13 is a long commitment. Payments last three to five years, your budget will be tight, and the case can be dismissed if you fall behind. It also affects your credit. For many people, those trade-offs are worth it to keep a home or car, but they should be weighed honestly.
Can Chapter 13 help me keep my house?
It may. Filing starts the automatic stay, and a plan can allow you to catch up on missed mortgage payments over time, as long as you keep up with the plan and your ongoing obligations. The outcome depends on your facts.
How long does it take to get a plan confirmed?
Under federal timelines, the meeting of creditors is held between 21 and 50 days after filing, and the confirmation hearing is held no later than 45 days after that meeting. Objections or plan changes can extend the process.
Do I have to go to court?
You must attend the meeting of creditors. Whether you need to appear at other hearings depends on the court and your case. Your attorney will tell you which appearances are required.
Talk With J. Brian Allen Before You File
J. Brian Allen is admitted to the U.S. Bankruptcy Courts for the Eastern and Northern Districts of Texas and works with debtors in Sulphur Springs and across Northeast Texas on Chapter 7 and Chapter 13 cases. When you hire J. Brian Allen, he is your attorney.
The initial consultation is free and can be held by phone or online. Our article on how a bankruptcy consultation helps you decide explains what to expect. Call (903) 439-5150 or request a consultation. The office at 430 Church Street, Suite 2, Sulphur Springs, is by appointment only.
For the federal court’s own overview of the process, see the Chapter 13 Bankruptcy Basics page from the U.S. Courts.
This article is for general educational purposes only and is not legal advice. Results depend on your facts and the law that applies to your case. J. Brian Allen is licensed in Oklahoma, is admitted to the U.S. Bankruptcy Courts for the Eastern and Northern Districts of Texas, and does not practice law in Texas state courts. J. Brian Allen is a debt relief agency. He helps people file for bankruptcy relief under the United States Bankruptcy Code.
