Bankruptcy in Texas
Texas bankruptcy laws include powerful exemptions that may help you protect your home, your car, and the income you rely on. But navigating the system alone can be risky. The rules vary depending on your income, assets, and the type of bankruptcy you file, and a single error could slow down or derail your case.
If you’re ready to take the next step, we can connect you with a qualified bankruptcy attorney in your area. A local legal professional can help you understand your options and develop a plan that fits your unique situation.
Don’t wait until things get worse—find out what protections are available to you today.
Types of Bankruptcy in Texas
Bankruptcy offers individuals and businesses in TX a legal path toward financial relief. For those drowning in debt, it can provide a chance to reduce or eliminate certain liabilities. However, approval isn’t automatic. You’ll need to demonstrate a legitimate financial hardship, such as job loss, illness, or overwhelming debt.
Not every debt is eligible for discharge. Obligations like child support, back taxes, alimony, and most student loans typically remain. Depending on your financial picture, you may qualify for Chapter 7, 11, or 13 bankruptcy. Each option has specific requirements and outcomes, so it’s important to carefully evaluate your income, assets, and long-term goals.
In Texas, bankruptcy cases are handled by the U.S. Bankruptcy Courts located in the Northern, Southern, Eastern, and Western Districts. Each district serves specific counties and oversees filings under Chapters 7, 11, and 13.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is often the right fit for people who need a clean break from overwhelming debt. It gives you the chance to reset your finances and move forward. That said, it’s not a decision to make lightly. Take a close look at your income and whether you have any realistic way to repay what you owe.
In most cases, Chapter 7 is granted to individuals with little to no steady income or those whose financial situations have drastically changed. While it can wipe out many unsecured debts, you may have to give up certain assets in the process. Once you file, the court issues an automatic stay that puts most collection efforts on hold, including foreclosure and wage garnishment.
To qualify for Chapter 7 bankruptcy in Texas, you’ll need to pass a means test, which compares your income to the state’s median income for a household of your size. As of the most recent figures, the median annual income for a single earner in Texas is approximately $61,000. This number increases with each additional household member.
If your income falls below the threshold, you may be eligible to file under Chapter 7. If it exceeds the limit, the court will examine your disposable income and expenses more closely.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is typically reserved for businesses or individuals with more complicated financial situations. Unlike other forms of bankruptcy, it focuses on restructuring debt through a court-approved plan rather than eliminating it outright. This approach allows the filer to spread payments over time, often between four and 18 months, while keeping operations running.
Filing for Chapter 11 bankruptcy involves extensive paperwork and strict disclosure requirements. Whether you’re a business owner or an individual, the court expects a clear, detailed picture of your financial situation and how you plan to restructure your debts.
You’ll need to submit several required forms along with your petition, each designed to help the court and your creditors assess your ability to follow through on your reorganization plan. These include:
- Voluntary Petition for Individuals or Businesses Filing for Bankruptcy
- Schedule of Assets and Liabilities
- Statement of Financial Affairs
- Schedule of Executory Contracts and Unexpired Leases
- Statement of Current Income and Expenses
- Disclosure of Compensation to Bankruptcy Petition Preparer (if applicable)
Chapter 13 Bankruptcy
Chapter 13 bankruptcy—often called a wage earner’s plan—lets you reorganize your debts without giving up everything you own. In TX, once you file, the court will appoint a trustee who reviews your assets, liabilities, and overall financial situation. From there, you’ll propose a repayment plan that typically lasts three to five years.
The structure of that plan depends on your income level and the property you’re aiming to protect. If approved, you’ll make monthly payments toward your debts—and in some cases, the court may allow certain balances to be reduced or discharged entirely.
Chapter 13 is designed for working individuals who need time to get current. After you file, the court assigns a trustee to oversee your case, and you’ll have to attend a confirmation hearing.
The Bankruptcy Process in Texas
There’s rarely a perfect moment to file for bankruptcy. However, filing can help reduce the pressure, pause collection efforts, and give you a path to financial stability.
In Texas, the process starts with organizing your financial paperwork. You’ll need to gather detailed records of your income, monthly bills, outstanding debts, and assets. This step is critical—the court relies on this information to assess your case. Leaving out key details or submitting inaccurate numbers can lead to delays or even a denial of your petition.
One of the benefits of filing in Texas is the strong set of exemptions available under state law, which may allow you to keep certain assets during bankruptcy. Key examples include:
- Unlimited homestead equity (with acreage limits based on location)
- Up to $50,000 in personal property for a single filer ($100,000 for a family)
- One vehicle per licensed household member
- Tools of the trade (equipment used for work)
- Certain retirement accounts and pensions
- Health aids and prescribed medical equipment
Work With an Experienced Texas Lawyer
The first step is understanding your options, and you don’t have to do that alone. We can connect you with a knowledgeable bankruptcy attorney in Texas who can evaluate your situation.
Don’t let fear or uncertainty delay your recovery. Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!
About the Author
Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.
With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.
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