In Texas, you can apply for both Chapter 7 and Chapter 13 Bankruptcy as an individual consumer.
Bankruptcy in Texas does not discharge some debts, including most back taxes, child support, alimony, most student loans, penalties or fines, and purchases greater than $550 made within 90 days of filing bankruptcy.
To file for Chapter 7 bankruptcy in Texas and have your debts erased, you must pass a means test. Under the test, if you make less than the median income for a Texas family, you may file under Chapter 7. For singles, the median income in Texas is $36,285. $51,355 is the median income for a family of two, $53,803 for three persons, and $61,511 for four persons. If there are more than four members of your family, add $6,900 for each additional person.
Before you file Chapter 7 bankruptcy in Texas you will need to undergo credit counseling approved by the state, as well as complete any unfiled tax returns.
Once you meet the minimum requirements, your attorney will need to file a Statement of Financial Affairs with the Court. Your Statement of Financial Affairs will include a list of all your debts, both secured (such as mortgages or car loans) and unsecured (such as credit cards and medical bills). You will also need to include names and contact information for all your creditors and an itemized list of your personal property and assets.
If you own a home or property and file bankruptcy, you will most likely be able to keep it under federal and Texas state exemptions. Keep in mind, however, bankruptcy does not erase mortgages or liens, so if you are behind on your payments, your house may still be foreclosed on.
You can also exempt your car from Texas bankruptcy in most cases, regardless of whether you choose Texas or federal exemptions.
If you choose Texas exemptions on your bankruptcy, you can keep the following: $30,000 in personal property, including vehicles, livestock, pets, family heirlooms, sporting equipment, food, clothing, and a limited amount of jewelry. You can also keep disability, social security, veterans', and unemployment benefits, alimony, and child support. You are also entitled to your burial plots, retirement plan, and any health aids you use.
If you choose federal exemptions on your bankruptcy, you can keep: most life insurance payments and policies; alimony and child support; jewelry valued up to $1,350; and social security and unemployment benefits.
If you have extra income that would allow you to repay your debts, you may want to file Chapter 13 bankruptcy. Under Texas Chapter 13 bankruptcy, you will establish a payment plan with the approval of the court.