How Do You Qualify for Chapter 13 Bankruptcy in Texas?

When debt becomes difficult to manage, Chapter 13 bankruptcy may provide eligible individuals with a way to reorganize their finances while working toward a more manageable repayment structure. Unlike Chapter 7 bankruptcy, Chapter 13 generally allows qualifying individuals to keep their property while repaying some or all of their debts through a court-approved plan.

However, not everyone qualifies for Chapter 13 bankruptcy. Income, debt amounts, previous bankruptcy cases, credit counseling, and other legal requirements can affect eligibility. Understanding these requirements before filing can help you determine whether Chapter 13 may be an appropriate option for your financial circumstances.

At Westcott Law Group PLLC, our Houston bankruptcy attorneys help individuals evaluate their financial situations, understand the requirements for Chapter 13, and navigate the bankruptcy process. If you are considering bankruptcy, our firm can help you understand your available options and what steps may be necessary to move forward.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a form of bankruptcy designed for individuals with regular income who need an opportunity to reorganize their debts. Rather than liquidating assets under Chapter 7, Chapter 13 generally allows eligible debtors to retain their property while making payments under a court-approved repayment plan.

Chapter 13 plans generally last between three and five years. During this period, the debtor makes payments to a Chapter 13 trustee, who distributes funds to creditors according to the terms of the approved plan.

For Houston residents who have fallen behind on mortgage or vehicle payments, Chapter 13 may be particularly relevant because it can provide a structured process for addressing certain past-due obligations while potentially helping individuals retain important assets.

Westcott Law Group PLLC works with Houston residents who are considering Chapter 13 and helps them understand whether this type of bankruptcy may fit their financial circumstances.

Who Can Qualify for Chapter 13 Bankruptcy?

Chapter 13 eligibility is based on several requirements. Generally, an individual must:

• Have a regular source of income
• Have debts within the applicable Chapter 13 limits
• Meet applicable requirements concerning previous bankruptcy cases
• Complete required credit counseling
• Be able to propose and fund a feasible repayment plan

Each requirement can involve additional legal considerations. Because eligibility depends on the details of your circumstances, reviewing your finances with a Houston bankruptcy attorney before filing can be valuable.

At Westcott Law Group PLLC, our attorneys can review your income, debts, assets, and other relevant financial information to help you understand whether Chapter 13 may be available to you.

Do You Need a Regular Income to File Chapter 13?

Yes. One of the central requirements for Chapter 13 is having regular income sufficient to support a repayment plan.

Although Chapter 13 is sometimes called a "wage earner's plan," you do not necessarily have to receive a traditional paycheck from an employer. The U.S. Courts explain that an individual may qualify even if self-employed or operating an unincorporated business, provided the individual has regular income.

Depending on the circumstances, income may come from sources other than traditional employment. The key consideration is whether the income is sufficiently stable and regular to support the proposed Chapter 13 plan.

Westcott Law Group PLLC can help Houston residents evaluate their income sources and determine how those sources may factor into a potential Chapter 13 filing.

What Are the Chapter 13 Debt Limits in Texas?

Chapter 13 also has limits on the amount of debt an individual can have at the time of filing.

For cases filed between April 1, 2025, and March 31, 2028, the applicable limits are:

• Less than $526,700 in unsecured debt
• Less than $1,580,125 in secured debt

These amounts apply to qualifying noncontingent, liquidated debts and are subject to periodic adjustment.

Unsecured debt generally includes obligations that are not backed by collateral, such as many credit card balances and personal loans. Secured debt generally involves a creditor's lien against property, such as a mortgage or vehicle loan.

Determining whether a particular obligation is secured or unsecured can sometimes require a closer review of the debt and the creditor's rights.

If you are unsure whether your debts fall within the applicable Chapter 13 limits, Westcott Law Group PLLC can review your financial obligations and help you understand how the limits may affect your eligibility.

Does Chapter 13 Have an Income or Means Test?

Income plays an important role in Chapter 13 bankruptcy. The bankruptcy process uses specific calculations to determine a debtor's current monthly income and applicable disposable income.

The Chapter 13 means-test forms use a defined calculation of current monthly income that generally looks at income received during the six calendar months before the bankruptcy case begins. The U.S. Bankruptcy Court for the Southern District of Texas provides guidance regarding the calculation and the applicable forms.

Your income can affect the length and structure of your repayment plan. Generally, a Chapter 13 plan lasts three years when current monthly income is below the applicable state median for a household of the same size and five years when income is above the applicable median, although specific circumstances can affect the plan period.

Because these calculations can be complicated, Westcott Law Group PLLC can help Houston clients understand how their income and expenses may affect a potential Chapter 13 plan.

Do You Have to Pass a Means Test to File Chapter 13?

The role of the means test in Chapter 13 is different from the way the test is used in Chapter 7. Chapter 13 uses income and expense calculations to determine issues such as the applicable commitment period and disposable income available for the repayment plan.

The amount a debtor must pay through a Chapter 13 plan depends on several factors, including income, allowable expenses, secured and priority debts, and the value of non-exempt property.

A Chapter 13 plan generally must satisfy applicable confirmation requirements. For example, the plan must provide for payment of projected disposable income over the applicable commitment period, and unsecured creditors generally must receive at least as much as they would have received if the debtor's assets had been liquidated under Chapter 7.

At Westcott Law Group PLLC, our Houston bankruptcy attorneys help clients understand these calculations and prepare for the financial requirements associated with Chapter 13.

Do You Have to Complete Credit Counseling?

Yes. Generally, an individual must complete credit counseling from an approved agency within the 180 days before filing for bankruptcy. The U.S. Courts identify limited exceptions, including certain emergency situations.

The counseling requirement is an important part of preparing for a Chapter 13 case. Failing to satisfy applicable pre-filing requirements can create problems with the bankruptcy filing.

Westcott Law Group PLLC can help you understand what must be completed before filing and what information and documentation you may need to prepare.

Can You File Chapter 13 If You Are Self-Employed?

Self-employed individuals and individuals operating an unincorporated business may be eligible for Chapter 13 as long as they otherwise satisfy the applicable requirements.

This can make Chapter 13 an important consideration for certain Houston business owners and self-employed individuals who have personal debts they cannot comfortably manage.

However, business finances can make a bankruptcy case more complicated. Separating personal and business obligations, identifying assets, and determining how income and expenses affect a repayment plan may require careful preparation.

At Westcott Law Group PLLC, our Houston bankruptcy attorneys can review your circumstances and explain how self-employment may affect your Chapter 13 case.

Can You File Chapter 13 If You Own a Home?

Owning a home does not automatically prevent someone from filing Chapter 13 bankruptcy. In fact, Chapter 13 may be an option for individuals who want to address certain past-due mortgage payments while working toward keeping their home.

Chapter 13 can provide a framework for addressing qualifying secured debts through a repayment plan. However, filing does not automatically eliminate the underlying mortgage obligation, and homeowners generally must continue meeting their ongoing mortgage obligations as required.

If you are facing foreclosure or have fallen behind on mortgage payments, timing can be particularly important. Westcott Law Group PLLC can help Houston homeowners understand how Chapter 13 may affect their situation and what options may be available.

Can Chapter 13 Help You Keep Your Vehicle?

Chapter 13 may also be an option for individuals who are behind on vehicle payments or concerned about repossession.

Depending on the circumstances, a Chapter 13 plan may provide a structured way to address certain vehicle-related debt while allowing the debtor to retain the vehicle. The specific treatment of a vehicle loan can depend on factors such as the loan terms, payment history, value of the vehicle, and applicable bankruptcy rules.

At Westcott Law Group PLLC, we help Houston residents evaluate how Chapter 13 could affect their vehicle and other secured debts.

Can Previous Bankruptcy Affect Chapter 13 Eligibility?

A previous bankruptcy filing does not necessarily mean you are automatically prohibited from filing Chapter 13. However, certain prior bankruptcy cases can affect eligibility.

For example, federal bankruptcy law restricts eligibility when a previous bankruptcy petition was dismissed within the preceding 180 days under specific circumstances, including certain failures to appear or comply with court orders or certain voluntary dismissals following creditor efforts to obtain relief from the automatic stay.

The timing and circumstances of a previous bankruptcy can also affect whether and when a debtor may receive another bankruptcy discharge.

If you have previously filed bankruptcy, it is important to tell your attorney about the earlier case. Westcott Law Group PLLC can review your bankruptcy history and explain how it may affect your current options.

Can Corporations File Chapter 13?

Chapter 13 is intended for individuals with regular income. Corporations and partnerships generally cannot file Chapter 13 bankruptcy.

However, an individual who operates a business as a sole proprietor may potentially qualify for Chapter 13 if the applicable requirements are satisfied.

This distinction is important for business owners who are considering bankruptcy. The structure of the business and the nature of the debts can influence which bankruptcy options are available.

Westcott Law Group PLLC can help Houston business owners understand the distinction between personal and business bankruptcy and determine what options may be worth considering.

What Happens After You Qualify for Chapter 13?

Meeting the eligibility requirements is only the beginning of the Chapter 13 process. After filing, the debtor generally proposes a repayment plan that explains how creditors will be paid.

A Chapter 13 plan must satisfy applicable requirements before the bankruptcy court can confirm it. The U.S. Courts explain that the plan generally must provide for the payment of projected disposable income during the applicable commitment period and satisfy other requirements concerning creditors and property.

Once a plan is confirmed, the debtor must make the required payments for the duration of the plan. Failing to make payments can create serious consequences, including the possibility of dismissal of the bankruptcy case.

Because the repayment plan is central to Chapter 13, careful preparation before filing can be critical. Westcott Law Group PLLC helps Houston clients understand the plan process and work toward a repayment structure that addresses their financial circumstances.

What If You Are Not Eligible for Chapter 13?

If you do not meet the requirements for Chapter 13, that does not necessarily mean you have no options for addressing overwhelming debt.

Depending on your financial circumstances, Chapter 7 bankruptcy or another form of debt relief may be worth considering. The appropriate option can depend on your income, assets, debt types, debt amounts, and financial goals.

At Westcott Law Group PLLC, our Houston bankruptcy attorneys can review your circumstances and explain the options that may be available to you. Rather than assuming that one type of bankruptcy is appropriate, our firm can help you understand the differences and make an informed decision.

Why Work With Westcott Law Group PLLC?

Chapter 13 bankruptcy involves detailed eligibility requirements, financial calculations, documentation, and court procedures. A mistake or incomplete filing can create delays or other complications.

At Westcott Law Group PLLC, our Houston bankruptcy attorneys work closely with clients throughout the Chapter 13 process. We take the time to understand your financial situation, explain the applicable requirements, help prepare for filing, and guide you through the repayment-plan process.

If you are behind on mortgage or vehicle payments, facing collection actions, or struggling to manage significant debt, speaking with a Houston bankruptcy attorney may help you better understand your available options.

Contact a Houston Chapter 13 Bankruptcy Attorney

Determining whether you qualify for Chapter 13 bankruptcy requires more than looking at your total debt. Your income, debt classification, previous bankruptcy history, credit counseling, and ability to fund a repayment plan can all matter.

Westcott Law Group PLLC helps individuals in Houston evaluate their financial circumstances and understand whether Chapter 13 may provide a path toward reorganizing their debts and addressing financial challenges.

If you are considering Chapter 13 bankruptcy in Texas, contact Westcott Law Group PLLC at 832-990-7443 to schedule a consultation with a Houston bankruptcy attorney. Our firm can help you understand the eligibility requirements and discuss the next steps for your situation.