Information on Filing Bankruptcy in Texas

Under federal law, Texas residents who can't meet all their financial obligations can petition their local bankruptcy courts for formal debt relief. But not everyone can automatically qualify for bankruptcy, and not every debt is eligible for this type of legal assistance, warns both the United States Bankruptcy Court Eastern District of Texas and the book "How to File for Chapter 7 Bankruptcy" (see Reference section). Learning the basic requirements for bankruptcy in Texas is an essential step to take before filing any type of formal bankruptcy petition.

Types

Most Texas residents pursuing a bankruptcy case declare either Chapter 7 or Chapter 13. Chapter 7 permanently eliminates eligible debts like credit card bills, loans and medical bills, according to both the United States Bankruptcy Court Eastern District of Texas and the book "How to File for Chapter 7 Bankruptcy." On the other hand, Chapter 13 is a partial debt repayment plan. Business owners and self-employed people typically opt to partially repay their personal and professional obligations under Chapter 11.

Chapter 7 Income Qualification

If you earn more than Texas's annual median income figure and want to declare Chapter 7 bankruptcy, you must prove through a federally designed means formula that you can't take care of your family and partially repay your debts. As of 2010, the annual median income for a single Texas resident was $38,940, while a family of four could earn up to $66,381 a year, notes the U.S. Trustee Program.

State Asset Exemptions

As of 2010, Texas residents don't risk losing their homes even when filing bankruptcy, according to the Bankruptcy Action website. Also, retirement accounts and most personal possessions are always safe despite bankruptcy status, notes the book "How to File for Chapter 7 Bankruptcy." In Texas, residents can retain up to $30,000 in personal assets including vehicles, property and bank accounts.

Ineligible Debts

Debts ineligible for bankruptcy elimination or reduction include child support, alimony, court fines and any debts incurred as a result of criminal activities. Texas local and state as well as federal tax bills can only be included in bankruptcy if the obligations were incurred at least three years ago. Also, almost all federally issued student loans are ineligible for bankruptcy assistance; Texas judges occasionally grant exceptions in cases of permanent and serious disability or a college's closure.

Costs

Texas debtors can file their cases without an attorney or "pro se," according to the United States Bankruptcy Court Eastern District of Texas. As of 2010, Chapter 7 court costs were $299; Chapter 13 paperwork fees were $274. Some debtors can qualify for a fee waiver or installment payment plan. Keep in mind that the court does not accept personal checks, credit cards or debit cards for payment.

References

• "How to File for Chapter 7 Bankruptcy"; Stephen Elias, Albin Renauer and Robin Leonard; 2009
• U.S. Bankruptcy Court Eastern District of Texas: General Questions
• U.S. Trustee Program: Census Bureau Median Family Income by Family Size
• Bankruptcy Action: Texas Bankruptcy Exemptions
• United States Bankruptcy Court Eastern District of Texas: Fee Schedule