Debtors filing bankruptcy in Texas have two options. For the individuals who want to retain their property and repay debts, but have suffered a financial blow to the family budget, may benefit from Chapter 13. Individuals sinking under the weight of massive debt simply want the opportunity to start over and make better financial decisions in the future. For them, Chapter 7 provides a solution.
Texas Bankruptcy Topics
- Personal Bankruptcy Options
- Keep Your Home: Bankruptcy and Foreclosure
- Texas Exemptions to Bankruptcy Liquidation
- Options for Filing Bankruptcy
- Local Bankruptcy Courts and Trustees
According to the U.S. Bankruptcy Code, Title 11, Texans can file straight bankruptcy through Chapter 7 or restructuring bankruptcy under Chapter 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is for the debtors that cannot resolve their debt within the next five years, if ever. Unexpected expenses, like massive medical bills, or a series of poor financial choices have resulted in a financial black hole. Unfortunately, some people try to take advantage of the court. Therefore, a means test determines whether the debtor truly qualifies for Chapter 7 debt relief. In addition, the court takes into consideration the median income in Texas. For a single individual, the average income is $38,545; the median wage for a family of two is $54,908; and the average wages for a three-person household is $57,053.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is for wage earners wanting to keep their belongings and pay off creditors. Unfortunately, a new job, a cut in pay, a series of unexpected expenses, or some other financial challenge has made it impossible to keep up with payments. With the help of the court to negotiate a restructuring payment plan, the debtor can regain financial footing. In order to qualify for Chapter 13 debt relief, the debtor cannot owe more than $1,010,650 in secured debt or $336,900 in unsecured debt. (See more on Filing Chapter 13 in Texas).
Filing bankruptcy, after receiving notice of foreclosure, will only delay the inevitable. The court will put a stay on creditor harassment. However, a lien holder may ask the court to lift the stay and allow the foreclosure to proceed. Alternatively, consult a bankruptcy lawyer before repossession is initiated; and learn any potential options for keeping the asset.
In the state of Texas, the bankruptcy court has a list of potential assets that the debtor can claim as exempt from the court proceedings. The chart below is a partial list of those assets:
Type of Asset(s)
Details on Applicable Exemption(s)
Unlimited amount, one acre, or less, in town; 100 acres-200 acres for family-out of town. Proceeds exempt for 6 months.
Fraternal and society; church and plan benefits; life, health, accident or annuity benefits; public school employees benefits for the retired; Texas employee group insurance; college or university employee benefits
Business partnership property
Qualifying ERISA, IRAs and keoghs; county and district employees; judges and municipal employees; firefighters and police officers; state employees and teachers
Burial plots, health aids,12 head of cattle, 60 other types of livestock, 120 fowl and domestic animals not to exceed $300,000-$600,000 for head of family, one 1-4 wheeled vehicle for every member of family, sporting equipment, firearms, food and clothing
Medical assistance, unemployment and workmen’s comp; public assistance and award for crime victim
75% of unpaid commissions and all unpaid wages
Use a Bankruptcy Lawyer
A bankruptcy lawyer is necessary to make sure the debtor receives all applicable asset exemptions, to answer all legal issues in court, to provide moral support, to file all of the necessary documents, to advise the debtor, and more. Self-representation is risky, considering all the nuances of the law.
Use a Filing Service
A filing service fills out and submits documents to the court. However, they do not always adhere to the total bankruptcy law. If important paperwork is missing, the debtor is held responsible. No one will answer questions in court, or provide legal advice.
File “Pro Se”
The court allows debtors to represent themselves and file pro se. However, the practice is strongly discouraged. It is better to borrow the money and have a learned professional handle the case. The alternative can have negative legal and financial ramifications for years to come.
Texas Eastern District Court Main Office
106 William M. Steger Federal Bldg
and United States Courthouse
211 West Ferguson Street
Tyler, TX 75702
Texas Northern District Court Main Office
1452 Earle Cabell Federal Bldg and
United States Courthouse
1100 Commerce Street
Dallas, TX 75242-1310
Texas Southern District Court Main Office
1217 Bob Casey
United States Courthouse
515 Rusk Street
Houston, TX 77002-2600
Texas Western District Court Main Office
G-65 John H. Wood, Jr.
United States Courthouse
655 East Durango Boulevard
San Antonio, TX 78206