People in Texas who are dealing with crippling debt may wonder about the rules for filing for Chapter 13 bankruptcy. Eligibility for Chapter 13 bankruptcy includes having a regular income that will allow the person to pay creditors back on a payment plan each month. Furthermore, the filer cannot have more than the maximum allowable unsecured and secured debt.

One of the first steps for a person filing for bankruptcy may be taking credit counseling. This process might involve determining what type of bankruptcy the debtor can file for. The next step is preparing a petition for the bankruptcy court. A Chapter 13 bankruptcy filing requires that the person submit proof of income, a list of creditors, a list of liabilities/assets and a list of all expenses for each month.

Creditors are notified as soon as a bankruptcy is filed because they are no longer permitted to continue with legal action or contact the debtor from that point. The bankruptcy trustee along with the court and the creditors must approve the payment plan. The debtor then pays the trustee monthly for several years, and the trustee distributes payments to the creditor.

An attorney may be able to explain about a Chapter 13 bankruptcy in more detail and assist a debtor in completing the necessary paperwork. One advantage of a Chapter 13 bankruptcy is that it can permit keeping certain assets, such as a home, as long as the person is able to catch up on payments. There are some debts that cannot be discharged in a bankruptcy. Among these are tax debt, child support debt and most student loan debt. At the conclusion of the payment period for a Chapter 13 bankruptcy, certain debts may be discharged even if they are not paid off in full.