How to File for Personal Bankruptcy in Texas

Question from John, How to File for Personal Bankruptcy in Texas

Answer from AI:

Filing for personal bankruptcy is a significant decision that can affect your financial future. In Texas, as in other states, individuals typically file for either Chapter 7 or Chapter 13 bankruptcy, depending on their specific circumstances. This guide provides a general overview of the steps involved in filing for personal bankruptcy in Texas, but it’s important to consult with a legal professional for advice tailored to your situation.

Understanding Your Bankruptcy Options

Chapter 7 Bankruptcy: Often referred to as “liquidation” bankruptcy, Chapter 7 allows for the discharge of most unsecured debts. To qualify, you must pass the “means test,” which compares your income to the median income for a household of your size in Texas. If your income is too high, you may not be eligible.

Chapter 13 Bankruptcy: This is a reorganization bankruptcy, where you propose a repayment plan to pay back all or part of your debts over three to five years. Chapter 13 is an option if you have regular income and want to keep property that might otherwise be liquidated in a Chapter 7 bankruptcy.

Steps to File for Bankruptcy in Texas

1. Gather Financial Documents: Compile a list of your debts, assets, income, and expenses. This includes tax returns, bank statements, loan documents, and any other financial records.
2. Complete Credit Counseling: Before you can file for bankruptcy, you must complete a credit counseling course from an approved agency within 180 days before filing. You can find a list of approved agencies on the U.S. Department of Justice website.
3. Fill Out Bankruptcy Forms: You’ll need to complete several forms detailing your financial situation. These forms are available for free on the website of the Texas bankruptcy court.
4. Pay Filing Fees: As of my last update, the filing fee for Chapter 7 bankruptcy is $338, and for Chapter 13 bankruptcy, it’s $313. Fee waivers are available for Chapter 7 filers with incomes below 150% of the poverty line.
5. File Your Petition: Submit your bankruptcy petition and accompanying paperwork to the Texas bankruptcy court. You can file in person or, in some cases, by mail.
6. Attend the 341 Meeting: After filing, you’ll be required to attend a meeting of creditors, also known as the 341 meeting, where creditors can ask questions about your finances and bankruptcy forms.
7. Complete a Debtor Education Course: After the 341 meeting, you must complete a debtor education course from an approved provider before your debts can be discharged.

Important Considerations

• Exemptions: Texas has generous bankruptcy exemptions that allow you to keep certain property in a Chapter 7 bankruptcy. These include your homestead, personal property, and specific types of retirement accounts. Understanding these exemptions is crucial.
• Legal Representation: While it’s possible to file for bankruptcy on your own, known as filing “pro se,” navigating bankruptcy laws can be complex. Consider consulting with a bankruptcy attorney to ensure your rights are protected and to help you make the best decisions for your situation.
• Impact on Your Credit: Bankruptcy can have a significant impact on your credit score and remains on your credit report for up to 10 years for Chapter 7 and 7 years for Chapter 13. However, it can also offer a fresh start and a path to rebuilding your financial future.

Seeking Professional Advice

Filing for personal bankruptcy involves navigating complex legal and financial landscapes. It’s strongly recommended to seek the advice of a qualified bankruptcy attorney who can provide guidance specific to your situation. They can help you understand the nuances of Texas bankruptcy law, including which chapter to file under and how to best protect your assets.

For more information and resources, visit the U.S. Courts Bankruptcy page, which offers a wealth of information on the process, forms, and finding legal assistance.

Remember, while bankruptcy can offer relief from overwhelming debt, it’s a serious step with long-term financial implications. Carefully consider all your options and seek professional advice to make an informed decision.