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Supporting You and Yours During Tough Times

Bankruptcy Information

Information on Chapter 7 & 13

Chapter 7 Bankruptcy

Chapter 7 Discharges (Eliminates) the Following Kinds of Debts in Most Cases:

  • Credit Card
  • Medical Bills
  • Personal Loans
  • Lawsuits
  • Judgments
  • Deficiencies on repossessed automobiles and foreclosures on homes
  • Most IRS debts older than 3 years
  • Personal Injury debts

Chapter 7 Does Not Eliminate:

  • Home mortgages or car payments (if you want to keep them)
  • Last 3 years of Income Taxes
  • Alimony or child support
  • 941 business taxes owed on employees
  • Student loans (unless you are eligible for hardship discharge)


You are usually allowed to keep most if not all of your assets in a Chapter 7 bankruptcy, including your house and cars as long as you can afford to make your regular monthly payments. Or you can return the item you have purchased and owe nothing further.

It is important you consult with a Board Certified Bankruptcy Attorney to make sure all of the above debts would be discharged by a chapter 7 bankruptcy in your case. There are exceptions in each category that may apply to your particular circumstances.

The above is meant as general bankruptcy information only, and not to be taken as legal advice applicable to your specific situation.

Chapter 13 Bankruptcy

Also known as “Wage Earner” bankruptcy.

Chapter 13 bankruptcy allows individuals to consolidate their debt while making affordable monthly payments to a trustee who pays their creditors. A payment plan is proposed which repays the debts over a three to five year period. The amount of the monthly payment and the length of the repayment plan is based upon the following factors:

  • Monthly income of the individual(s)
  • Monthly expenses of the individual(s)
  • Amount and nature of the debts.

The most common uses of chapter 13 involve:

  • Repayment of mortgage arrears (back amounts owed) on home to stop foreclosure
  • Restructuring of auto loans to save a vehicle
  • Pay IRS last three year’s taxes without further penalties or with no threat of levies
    on bank accounts or wages.
  • Stop student loan levies

Secured debts, (like car and furniture) can be discharged by paying only the value of the item(s) purchased, if it is less then the amount you owe. In Chapter 13 unsecured debts may be paid less than 100% on the dollar. How much you pay the unsecured creditors, like credit cards and medical bills, depends on your budget. It may be 1% or 100%. A person receives a discharge under Chapter 13 once the payment plan is complete, and the unpaid balances are discharged.

The above is meant as general bankruptcy information only, and not to be taken as legal advice applicable to your specific situation.

Contact Michael Pledger by Phone at 512-634-8404 to discuss your particular situation and whether you qualify.

Michael Pledger’s Main office in Austin at:

14090 Southwest Freeway
Suite 300
Sugar Land, TX 77478
Phone: 512-634-8404

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