Chapter 13 Eligibility in Houston

Your total debts - secured and unsecured combined - must be under $2,750,000 (current limit). There is no minimum debt requirement.

Basic Eligibility Requirements

To file Chapter 13 bankruptcy in the Southern District of Texas, you must meet these requirements:

Regular income: You need sufficient regular income to fund a repayment plan. This includes wages, self-employment income, Social Security, pension, or other regular payments.
Debt limits: Your total debts (secured and unsecured combined) must be under $2,750,000 (current limit as of 2024).
Tax returns: You must have filed all required tax returns for the 4 years before filing.
Credit counseling: Complete an approved credit counseling course within 180 days before filing.
No prior dismissal: If a prior case was dismissed within 180 days for failure to appear or comply with court orders, you cannot file immediately.

How Income Determines Your Plan Length

Below Texas Median

If your income is below the Texas median ($60,840 for one person), your repayment plan can be as short as 3 years (36 months). You have the option to propose a longer plan up to 5 years.

Above Texas Median

If your income exceeds the median, your plan must be 5 years (60 months). Your disposable income after allowed expenses goes to creditors through the plan. The means test determines your disposable income.

Why Houston Residents Choose Chapter 13

Save your home: Cure mortgage arrears over 3-5 years while keeping your home. Non-judicial foreclosure in as few as 21 days. Sales occur the first Tuesday of each month.
Keep your car: Pay the vehicle's value (cramdown) if the loan is more than 910 days old. Texas exempts one vehicle per licensed household member if needed for work.
Strip junior liens: If your home is worth less than the first mortgage, second mortgages may be removed entirely.
Protect co-debtors: The Chapter 13 co-debtor stay (section 1301) protects co-signers from collection on consumer debts.
Income too high for Chapter 7: If you do not pass the means test, Chapter 13 is your path to debt relief.

Frequently Asked Questions

What are the debt limits for Chapter 13 in Houston?

Your total debts - secured and unsecured combined - must be under $2,750,000 (current limit). There is no minimum debt requirement.

Do I need a job to file Chapter 13 in Texas?

You need regular income, but it does not have to come from employment. Social Security, pension, disability, rental income, or support from a spouse or household member can all qualify.

How long is a Chapter 13 plan?

If your income is below the Texas median ($60,840 for one person), the plan can be 3 years. Above median, it must be 5 years. No plan can exceed 5 years.

Can I file Chapter 13 after a Chapter 7 discharge?

Yes. You can file Chapter 13 after a Chapter 7 discharge, but you must wait 4 years from the Chapter 7 filing date to receive a Chapter 13 discharge. You can still use Chapter 13 for its repayment benefits even without a discharge (called a Chapter 20). Check timing with the 1328(f) screener.

What happens if I cannot make plan payments?

You can modify the plan, convert to Chapter 7, or request a hardship discharge if you have paid most of your plan and the failure was due to circumstances beyond your control. The Southern District of Texas requires prompt notification.

What is the dismissal rate for Chapter 13 in Texas?

Chapter 13 has a higher dismissal rate than Chapter 7 nationally. Many cases are dismissed for failure to make plan payments or file required documents. Staying current on payments is critical.