Chapter 13 bankruptcy in Texas is a court-supervised repayment plan that lets you catch up on mortgage arrears, reduce certain secured debts, and keep property you would lose in a Chapter 7 liquidation — all while paying creditors over three to five years. If you are behind on your home or car payments and earn a regular income, Chapter 13 may be the most powerful debt relief tool available to Texas residents. Chapter 7 bankruptcy in Texas is faster but requires passing a means test and offers no mechanism to cure mortgage arrears.
What Is Chapter 13 Bankruptcy in Texas?
Chapter 13 bankruptcy — sometimes called the “wage earner’s plan” — is a reorganization bankruptcy under Title 11 of the United States Code. Instead of liquidating your assets as in a Chapter 7 case, you propose a repayment plan that lasts three to five years. At the end of the plan, remaining eligible unsecured debts are discharged.
Chapter 13 is especially valuable in Texas for three reasons. First, it gives you a legal mechanism to cure mortgage arrears and stop foreclosure — something Chapter 7 cannot do. Second, it lets you cram down a car loan balance to the vehicle’s current market value if you financed the vehicle more than 910 days before filing. Third, it can protect non-exempt assets you would otherwise lose in a Chapter 7 liquidation, even though Texas exemptions are already among the most generous in the country.
The U.S. Courts Chapter 13 overview provides the federal framework, but local rules in Texas’s four bankruptcy districts affect attorney fees, plan procedures, and trustee requirements.
Who Qualifies for Chapter 13 Bankruptcy in Texas?
To file Chapter 13 bankruptcy in Texas, you must meet four requirements:
- Regular income: You must have a stable, regular income — wages, self-employment, pension, Social Security, or rental income — sufficient to fund a repayment plan.
- Debt limits (April 2025–March 2028): Your debts must fall within the current federal limits shown in the table below.
- Credit counseling: You must complete an approved credit counseling course within 180 days before filing.
- No recent dismissals: If a prior bankruptcy was dismissed within the past 180 days for willful failure to comply with court orders, you may be temporarily ineligible.
| Debt Type | Maximum Allowed | Effective Period |
|---|---|---|
| Secured debts (mortgages, car loans) | $1,580,125 | April 1, 2025 – March 31, 2028 |
| Unsecured debts (credit cards, medical bills) | $526,700 | April 1, 2025 – March 31, 2028 |
Unlike Chapter 7, there is no means test to pass for Chapter 13 eligibility. However, your income does determine the length of your repayment plan.
How the Chapter 13 Repayment Plan Works in Texas
Your repayment plan is the heart of a Chapter 13 case. You submit a proposed plan within 14 days of filing, and the court must confirm it. The plan pays creditors in a specific priority order over the plan term.
Plan length is determined by your income relative to Texas median income (effective November 1, 2025):
| Household Size | Texas Median Income | Plan Length |
|---|---|---|
| 1 person | $65,123/year | 3 years if below median; 5 years if above |
| 2 people | $84,491/year | 3 years if below median; 5 years if above |
| 3 people | $96,728/year | 3 years if below median; 5 years if above |
| 4 people | $114,938/year | 3 years if below median; 5 years if above |
| 5+ people | Add $11,100 per additional person | 3 years if below median; 5 years if above |
The plan must pay: (1) all priority debts in full — taxes, domestic support obligations, and trustee fees; (2) secured creditors at least the value of the collateral; and (3) unsecured creditors at least as much as they would receive in a Chapter 7 liquidation (the “best interests of creditors” test). Any remaining eligible unsecured balance is discharged at plan completion.
Saving Your Home: Mortgage Arrears in Chapter 13 Bankruptcy in Texas
Stopping foreclosure is one of the primary reasons Texas homeowners file Chapter 13. The moment you file, the automatic stay halts all foreclosure proceedings — including a sale scheduled for the next day. You then have the full plan period to catch up on missed mortgage payments.
Here is how it works in practice: If you are $18,000 behind on your mortgage, your Chapter 13 plan spreads that $18,000 cure amount across 60 months — roughly $300 per month in addition to your ongoing mortgage payment. As long as you make both your plan payment to the trustee and your regular mortgage payment going forward, your lender cannot foreclose.
Texas homeowners benefit from the state’s unlimited homestead exemption, which protects the full equity in your primary residence. In a Chapter 13 case, this means unsecured creditors receive nothing from your home’s value — all equity is shielded.
Note: In the Southern District of Texas, home mortgage payments are typically routed through the Chapter 13 trustee rather than paid directly to your lender. Confirm the procedure with your attorney for the specific district where you file.
Vehicle Cram-Down: Reducing Your Car Loan in Chapter 13 Bankruptcy in Texas
If you owe more on your vehicle than it is worth and you financed it more than 910 days before filing (approximately 2.5 years), Chapter 13 lets you cram down the loan balance to the car’s current market value. The remaining balance becomes unsecured debt, which may be discharged at plan completion.
Example: You owe $22,000 on a truck worth $14,000, and you purchased it three years ago. A cram-down reduces your secured car debt to $14,000. The $8,000 difference is reclassified as unsecured debt. You pay interest on the $14,000 secured balance — typically at the federal prime rate plus 1–3%, following the Till v. SCS Credit Corp. (2004) Supreme Court formula. Each Texas district has its own practice on the exact rate; consult local court rules.
If you purchased the vehicle within 910 days of filing, the full loan balance is treated as secured and the cram-down is not available.
How to File Chapter 13 Bankruptcy in Texas: Step by Step
- Confirm eligibility: Verify your debt totals are below the limits ($1,580,125 secured / $526,700 unsecured) and that you have regular income to fund a plan.
- Complete credit counseling: Take an approved credit counseling course within 180 days before filing. Courses cost $15–$50 and are available online.
- Hire a bankruptcy attorney: Chapter 13 cases are highly procedural. The bankruptcy courts themselves advise against filing without an attorney. Most Texas attorneys offer free consultations.
- Gather financial documents: Collect six months of pay stubs, two years of tax returns, recent bank statements, a complete list of debts, and documentation of all assets.
- Prepare and file the petition: Your attorney files the bankruptcy petition, schedules, Statement of Financial Affairs, and a proposed Chapter 13 plan with the appropriate Texas district court.
- Automatic stay takes effect: The moment you file, the automatic stay stops all collection calls, lawsuits, garnishments, and foreclosure or repossession actions.
- Attend the 341 Meeting of Creditors: Held approximately 21–40 days after filing. You answer questions from the trustee under oath. Most creditors do not appear. Since COVID-19, most 341 meetings in Texas are conducted by phone or video.
- Plan confirmation hearing: The bankruptcy court holds a confirmation hearing, typically 45–90 days after filing. The judge reviews whether your plan meets all legal requirements.
- Make plan payments: Once confirmed, you make regular payments to the Chapter 13 trustee — usually monthly — for the full plan term of three to five years.
- Complete debtor education: Before discharge, you must complete an approved financial management course (cost: $15–$50).
- Receive discharge: After completing all plan payments, the court issues a discharge of remaining eligible unsecured debts. The process is complete.
How Much Does Chapter 13 Bankruptcy Cost in Texas?
Chapter 13 costs include the court filing fee, attorney fees, and a trustee administrative fee built into your monthly plan payment. Here is a breakdown:
| Cost Item | Amount | Notes |
|---|---|---|
| Court filing fee | $313 | Same in all Texas districts; installment payment available |
| Credit counseling course | $15–$50 | Required before filing; online providers available |
| Debtor education course | $15–$50 | Required before discharge |
| Attorney fee — Northern District | $4,250 (no-look base) | Set by local court rules; most paid through plan |
| Attorney fee — Eastern District | $4,500 (no-look base) | Set by local court rules; most paid through plan |
| Attorney fee — Southern/Western Districts | $3,500–$4,000 (typical range) | Varies; confirm with your attorney |
| Trustee administrative fee | ~7–10% of plan payments | Built into monthly plan payment; varies by trustee |
One major advantage of Chapter 13 is that the majority of attorney fees are paid through your plan — meaning you typically pay only a small retainer up front (often $500 or less) and the remainder is spread across your monthly plan payments. You do not need to have thousands of dollars saved before you can file.
What Debts Does Chapter 13 Bankruptcy in Texas Address?
Chapter 13 treats debts in three categories:
Priority Debts — Paid in Full
Priority debts must be paid 100% through your plan. These include recent federal and state income taxes (generally the past three years), domestic support obligations (child support and alimony arrears), and wages owed to employees if you operate a business. There is no discharge of priority debts — they must be satisfied before the plan completes.
Secured Debts — Paid to Value of Collateral
Secured debts — including mortgage arrears, car loans, and any debt backed by collateral — are addressed through the plan. Mortgage arrears are cured over the plan term. Eligible vehicle loans may be crammed down to current value. At the end of the plan, any remaining secured balance on an ongoing obligation (like your regular mortgage) continues as normal.
Unsecured Debts — Partially or Fully Discharged
General unsecured debts — credit cards, medical bills, personal loans, older income taxes, and most other unsecured obligations — receive whatever your plan pays them (which may be pennies on the dollar) and the rest is discharged at plan completion. Student loans are generally not dischargeable without an adversary proceeding proving undue hardship.
Texas Bankruptcy Courts: Where to File Chapter 13 Bankruptcy in Texas
Texas has four federal bankruptcy districts. Your county of residence determines which district handles your case.
| District | Main Office | Key Counties Served |
|---|---|---|
| Northern District of Texas | Dallas (Earle Cabell Federal Building, 1100 Commerce St.) | Dallas, Tarrant, Collin, Denton, Lubbock, Amarillo, and surrounding counties |
| Southern District of Texas | Houston (Bob Casey U.S. Courthouse, 515 Rusk St.) | Harris, Fort Bend, Galveston, Laredo, McAllen, Corpus Christi, and surrounding counties |
| Eastern District of Texas | Plano (MG Williams Justice Center, 660 N. Central Expressway) | Collin (Plano), Jefferson (Beaumont), Smith (Tyler), and surrounding East Texas counties |
| Western District of Texas | San Antonio (615 E. Houston St.) | Bexar, Travis (Austin), El Paso, Waco, Midland, and surrounding counties |
Use the U.S. Courts court locator to confirm which district covers your specific county. Each district publishes its own local rules, plan forms, and trustee procedures — your attorney should be familiar with the requirements of the district where you file.
Alternatives to Chapter 13 Bankruptcy in Texas
- Chapter 7 bankruptcy in Texas — If you qualify under the means test and do not have significant assets to protect, Chapter 7 is faster and simpler. Most cases complete in 3–5 months with no repayment plan required.
- Bankruptcy cost in Houston — See average attorney fees and court information for Chapter 7 and Chapter 13 in the Houston metro area.
- Bankruptcy cost in Dallas — Compare Chapter 7 and Chapter 13 attorney fees and filing procedures for Dallas-area residents.
Frequently Asked Questions About Chapter 13 Bankruptcy in Texas
How long does chapter 13 bankruptcy take in Texas?
A Chapter 13 case in Texas takes three to five years from filing to discharge. If your income is below the Texas median income for your household size, a three-year plan is sufficient. If your income is above the median, a five-year plan is required. The full timeline from filing to your first plan payment is typically 45–90 days while your plan is pending confirmation.
Can I keep my house if I file chapter 13 in Texas?
Yes. One of the primary purposes of Chapter 13 in Texas is to stop foreclosure and allow you to keep your home. The automatic stay halts any pending foreclosure the moment you file. Your Chapter 13 plan then spreads your missed payments (arrears) over the plan term — typically three to five years — while you continue making your regular mortgage payment going forward. As long as you comply with the plan, your lender cannot foreclose. Texas also provides an unlimited homestead exemption, meaning no equity in your primary residence is at risk from unsecured creditors.
What is the income limit for chapter 13 bankruptcy in Texas?
There is no income limit for Chapter 13 in Texas — it is available regardless of how much you earn. However, your income relative to the Texas median determines plan length. If you earn above the median ($65,123 for a single person, $114,938 for a household of four, effective November 1, 2025), a five-year plan is required. If you earn below the median, a three-year plan may be approved.
How much does chapter 13 bankruptcy cost in Texas?
The court filing fee for Chapter 13 in Texas is $313. Attorney fees vary by district: the Northern District sets a no-look base fee of $4,250; the Eastern District sets $4,500; the Southern and Western Districts typically range from $3,500 to $4,000. Most attorney fees are paid through your monthly plan payment — you typically pay only a small retainer (often around $500) up front. A trustee administrative fee of approximately 7–10% is also built into your plan payments.
Can I reduce my car loan through chapter 13 in Texas?
Yes, if you financed your vehicle more than 910 days (approximately 2.5 years) before your filing date and you owe more than the car is worth. A cram-down reduces your secured loan balance to the vehicle’s current market value. The remaining balance above that value is reclassified as unsecured debt, which may be discharged at plan completion. You pay interest on the reduced secured balance — typically at the federal prime rate plus 1–3% depending on your district’s local practice.
What happens if I miss a chapter 13 plan payment in Texas?
Missing plan payments is the most common reason Chapter 13 cases are dismissed in Texas. If you miss a payment, the Chapter 13 trustee may file a motion to dismiss your case. If your case is dismissed, the automatic stay lifts and creditors — including your mortgage servicer — can resume collection activity and foreclosure. You may be able to cure a missed payment or modify your plan if you contact your attorney quickly. If you experience a permanent income change, a plan modification may be available to lower your monthly payment.
Can I file chapter 13 bankruptcy on my own in Texas?
Technically yes, but it is strongly discouraged. The U.S. Bankruptcy Courts note that Chapter 13 cases are complex and rarely succeed without an attorney. You must prepare a detailed repayment plan, comply with district-specific local rules, appear at a 341 meeting, attend a confirmation hearing, and make consistent plan payments for three to five years. Most Texas bankruptcy attorneys offer free initial consultations and accept Chapter 13 cases with low up-front retainers because most fees are paid through the plan.
Will chapter 13 bankruptcy stop wage garnishment in Texas?
Yes. The automatic stay that takes effect the moment you file Chapter 13 immediately stops most wage garnishments. Your employer must cease any garnishment in place once notified of the bankruptcy filing. Exceptions apply to domestic support obligations — child support and alimony garnishments are not stopped by the automatic stay.