If you have been suffering from overwhelming debt for a while, the question “What is the income limit for bankruptcy in Texas?” may have crossed your mind. The answer to this question is not universal, as there are differences based on which type of bankruptcy you file. Two of the most common options, Chapter 7 and Chapter 13, take a completely different approach. Having options is helpful, as everyone’s debt and capability of seeking relief differ.
If you have been feeling down on yourself about generating large debt and considering this as an option, you should know that bankruptcy is more common than you might think. In 2024 alone, the Western District of Texas saw 6,971 bankruptcy filings across all chapters. Many of these individuals have teamed up with an Irving bankruptcy lawyer to share their stories and seek professional guidance on what options available today make the most sense for their situation.
Two of the most popular bankruptcy options are Chapter 7 and Chapter 13. Based on your goals and current financial situation, you could find one to work better for you over the other. Each has its own set of benefits and requirements to consider.
Chapter 7 bankruptcy is also sometimes referred to as “liquidation bankruptcy.” This option works well for those who have limited incomes and few assets. If you choose this option, it could quickly help you discharge most unsecured debts, including:
Chapter 7 bankruptcy is known to move quickly. It doesn’t require a payment plan, which is an attractive component to many who choose this route. However, you may still be required to sell any non-exempt property to help pay off some outstanding debt to creditors. Many lawyers will recommend this option to those who don’t have enough income to take on a new monthly payment or have enough valuable assets worth protecting.
If that doesn’t sound like a good fit, you could also consider moving forward with Chapter 13. This is also sometimes referred to as the “wage earner’s plan.” It’s commonly recommended to individuals who have a consistent income they can depend on, allowing them to restructure their debt through a payment plan. This repayment plan must be approved by the court.
By leveraging the benefits of Chapter 13, you could:
To see if you qualify for Chapter 7 bankruptcy, your income will be compared to the median income limits set by the U.S. Trustee Program. These limits are constantly evolving and vary based on your household size. If your income falls below the threshold, you will typically pass the means test automatically.
Here is where the numbers sit:
For every household member you have beyond four, add $9,900. If you still have questions about whether you qualify or not, it’s wise to complete this exercise with a bankruptcy attorney.
Beyond income alone, the courts will also look into:
If you are finding that your income is sitting on the borderline, working with a bankruptcy attorney can help you determine which option might be a stronger fit. After doing so, they will guide you on how to present your finances to ensure you qualify for the option you wish.
A: There are many different factors that could disqualify you from filing in Texas. One of the biggest factors is if you had a recent bankruptcy request dismissed, especially if it was due to fraud or failure to show up in court. This could prevent you from filing again for a while. You could also be ineligible for certain options, like Chapter 7, if your income is too high and you aren’t able to pass the means test.
A: Yes, bankruptcy is becoming more common across the United States for many different reasons. Rising debt, inflation, and economic uncertainty are a few speculations as to why. Nationwide, there has been a 13.1% increase in bankruptcy filings from March 31, 2024, 2025. This shows how widespread the reality of struggling with finances truly is, not just for Texans, but for others alike across the country.
A: You won’t necessarily lose everything if you choose to file for bankruptcy. Make sure you work with your attorney to be aware of all the different exemptions that could protect some of your assets. For instance, you may have the opportunity to keep your primary residence, a portion of your wages, or your retirement account, depending on how you move forward. All of these specifics are dependent on your financial situation and the type of bankruptcy you file.
A: Bankruptcy is not just limited to individuals in Texas. Companies that are also struggling to keep up with debt have an option as well. In fact, the Southern District of Texas recently reported 1,223 business bankruptcy filings. When doing so, a business could actually help preserve jobs, protect its assets, or provide an orderly exit when trying to recover from the financial struggle isn’t feasible.
If you are struggling to know if bankruptcy is right for you, contact our firm today. We will take a deep look into your financial matters and give our recommendation on which option could help you seek the relief you need as soon as possible.
