Bankruptcy is a legal term that essentially means you can no longer pay your debts and are in need of serious financial assistance. By filing for bankruptcy, your debts are halted until you can sort your finances out and figure out a solution, whether it be a payment plan or asset liquidation. If you live in Texas and your finances are in jeopardy, you may be wondering how to file for bankruptcy in Texas. Texas’s laws are a little different when it comes to filing for bankruptcy, so a thorough understanding of these laws is vital.
For the most part, filing for bankruptcy in Texas is not all that different from filing in any other state. Bankruptcy law is federal law, but Texas has state-specific exemption laws that can make things a little different in the Lone Star State.
Filing for Chapter 7 bankruptcy is a solid option for people who need faster and cheaper financial relief. It only takes a few months to complete, and in the end, you do not have to pay anything. In a Chapter 7 bankruptcy case, you will essentially forfeit the rights to nearly all of your significant assets except what you need to live a basic, functional life, such as a home and a vehicle.
Your luxury items, such as second homes and valuable collectibles, will be seized and liquidated to pay back as much as possible of your outstanding debt.
Chapter 13 bankruptcy allows you to enter a payment plan for a duration of three to five years, allowing you to keep your assets and giving you time to repay your debts. You only qualify for Chapter 13 if your family’s income is less than the median income for the average family of the same size in your state.
What makes Texas a bit different from other states are its exemption laws. Here are a few:
A: Qualification for bankruptcy in Texas is almost entirely dependent on your income. If your annual income is below the median income for the average household of your size, you may automatically qualify for Chapter 7 bankruptcy. Regardless, you will need to pass a means test to determine if your income qualifies for bankruptcy.
A: No, you do not need a lawyer to file for bankruptcy in Texas. However, it couldn’t hurt to seek the advice of an experienced legal professional who understands how bankruptcy law works in your state. Bankruptcy is a big, complex decision that will affect your financial future. It is not something to be entered into lightly. Seeking assistance is always a viable option.
A: Texas allows for a personal property exemption when filing for bankruptcy. Under that exemption, you are allowed to claim up to $50,000 for a single-person household and up to $100,000 for a family unit. Any property you claim will have its value added to your total exemption, so make sure you think about what you absolutely need to keep.
A: There are some situations where you can be denied bankruptcy in Texas. For example, you can be denied if you have already received a bankruptcy discharge at some point in the past eight years, if you were already dismissed from bankruptcy in the past 180 days, or if you have defrauded your creditors in the past.
The legal team at Steele Law Firm, PLLC, is prepared to help you understand how bankruptcy can affect you and your family. Dealing with bankruptcy alone can be daunting, but we are here to help. Contact us to schedule a consultation as soon as you can.
