Chapter 7 Bankruptcy Texas

If you live in Texas and are considering filing for Chapter 7 bankruptcy, read on - we will explain basic bankruptcy.

Basic bankruptcy requirements are set by federal law, but each state adds to the law. Take time to understand Texas law and bankruptcy.

You should consult with a bankruptcy attorney if you are considering filing bankruptcy.

What is Chapter 7 bankruptcy in Texas, and how can it help you erase your debts

There are different types of personal bankruptcy cases. The most common for individuals are Chapter 7 and Chapter 13. Chapter 7 is for people who meet a means test and need most debt erased. Chapter 13 is for people who have too much money and want debt restructured - in other words, Chapter 7 erases debt while Chapter 13 allows the person to repay their debts.

You need to learn about federal exemptions and specific Texas bankruptcy exemptions. These include products like a retirement account.

How to file for Chapter 7 bankruptcy in Texas

In order to file for Chapter 7 bankruptcy in Texas, you must complete a credit counseling course with an approved agency within 6 months of filing your bankruptcy petition.

Assemble the paperwork to file a bankruptcy petition with the bankruptcy court in your county. The bankruptcy petition includes disclosure of all finances. You will detail your income, debt, and property for up to the past 10 years.

You will need the following bankruptcy forms if you live in the state of Texas:

• Form 101 (“Voluntary Petition for Individuals Filing Bankruptcy”)
• Certificate of completion for credit counseling
• Form 106Sum (Summary of Your Assets and Liabilities and Certain Statistical Information). This details total value of your property, total debt amounts, and information about income and expenses.
• Form 106A/B (Schedule A/B: Property) lists all of your belongings. Everything is considered an asset and must include an estimate of how much they could be sold for. 
• Form 106C (“Schedule C”) instructs the bankruptcy trustee as to what property is protected by an exemption. 
• Form 106D (Schedule D: Creditors Who Hold Claims Secured By Property (individuals)) lists secured debt like real property (like a house) or personal property (car loans).
• Form 106E/F (Schedule E/F: Creditors Who Have Unsecured Claims (individuals)) lists all other debts.
• Form 106G (Executory Contracts and Unexpired Leases (individuals)) includes home rentals, car leases, or other long-term contracts.
• Form 106H (Schedule H: Your Codebtors) must be filed even if you do not have co-debtors.
• Form 106I (Schedule I) lists income from all sources.
• Form 106J (Your Expenses (individuals)) includes how much you spend every month on things like rent, food, transportation, etc.
• Form 106Dect (Declaration About an Individual Debtor’s Schedules) is for your signature to the accuracy of all this data.
• Form 107 (Your Statement of Financial Affairs for Individuals Filing for Bankruptcy) covers information about your financial situation that is not part of the schedules, including pending legal actions. 
• Form 122A-1 (“Chapter 7 Statement of Your Current Monthly Income”) is the means test. You must swear that you are below the income limits for a Chapter 7 bankruptcy. 
• A creditor matrix is a list of all creditors and their addresses and is usually accompanied by verification. Ask your local bankruptcy court for the preferred format. 
• $338 filing fee

You may need the following forms:

• Official Form 103B (Application to Have the Chapter 7 Filing Fee Waived) is needed if your household income is less than 150% of the federal poverty guidelines and you cannot pay the Chapter 7 court filing fee. 
• Official Form 103A, (Application for Individuals to Pay the Filing Fee in Installments) allows for a down payment and sets up 3 payments to pay off the fee. 
• Official Form 121 discloses your full social security number. Keep this form separate from other bankruptcy forms so it is not included in public court filings.
• Official Form 108 (Statement of Intention for Individuals Filing Under Chapter 7) tells the bank what to do about any secured debt (Schedule D) or any unexpired contracts (Schedule G).
• Official Form 122A-2 (Chapter Means Test Calculation) is filed if your median income is greater than your state's median income.
• Official Form 122A-1Supp (Statement of Exemption from Presumption of Abuse under §707(b)(2)) is filed if you’re not required to complete a means test because debt is primarily non-consumer or based on your military service. 
• Official Form 106J-2 (Schedule J-2: Expenses for Separate Household of Debtor 2) is filed by a married couple filing for bankruptcy but not living together.
• Official Form 101A (an eviction judgment against you) is filed if you’re behind on your rent and your landlord has received a judgment to evict you.
• Official Form 101B is filed if you are attempting to stay in your home for more than 30 days after you file.

Finally, you may need to file local forms as your bankruptcy court district requires. Always ask the clerk what forms you need to file and what format they prefer.

The benefits of filing for Chapter 7 bankruptcy in Texas

There are some benefits to filing for Chapter 7 bankruptcy in Texas. These include a fresh start.

You get to keep the future income. In other bankruptcies, you may end up with wage garnishments.

There is no limit on the amount of debt you can have, and there is no repayment plan.

It also only takes about 3 months to go through the bankruptcy process.

The pros and cons of filing Chapter 7 Bankruptcy in Texas

The Chapter 7 Pros

The pros of Chapter 7 bankruptcy include the following:

• Debt forgiveness through discharge for most unsecured debt and no repayment required
• Relief from creditor harassment
• Home and personal property exemptions allow you to keep your home, vehicle, household goods, and certain other items
• Rebuild credit score
• Help with your home mortgage payments, to buy yourself some time to pay up back mortgage payments through restructuring finances
• Relief from car loan through surrendering your car, affirming the debt, or redeeming the vehicle

The Chapter 7 Cons

• Credit damage for up to 10 years
• Not everything is discharged, including alimony and child support, tax debt, student loans, and some personal injury debts
• Loss of property to repay debts - Texas law includes exempt property amounts like a homestead exemption
• Potential costs and be quite expensive, especially if you hire a bankruptcy lawyer
• Means test failure means your case may be converted to Chapter 13 or dismissed

The steps you need to take to file for Chapter 7 bankruptcy in Texas

1. Complete a credit counseling course from an approved agency
2. File your bankruptcy packet
3. Attend the 341 Creditor Meeting
4. Take the personal debtor's education or financial management course and file Form 23

After this and the steps that the court or trustee must complete are finished, your debts are discharged.

What to expect after filing for Chapter 7 bankruptcy in Texas

Once you file for Chapter 7 bankruptcy, the court notifies creditors of an automatic stay. This prohibits almost all creditors from collection actions. They cannot call you, collect money from you, foreclose on your home, repossess your car, or place a lien on your property. There are exceptions, and a creditor can go to court and ask to have the automatic stay lifted.

Your information is turned over to a bankruptcy trustee who oversees the bankruptcy case. You'll need to provide your most recent tax returns, along with bank statements, paycheck stubs, and any other information needed.

Your secured debts are evaluated. Depending on your situation, you have the right to pay creditors, reaffirm the debt, or have assets repossessed. The trustee will petition to sell the nonexempt property and distribute the proceeds.

Bankruptcy Chapter 7 FAQ

Chapter 7 Bankruptcy Alternative in Texas

Luckily, companies like Pacific Debt Relief can help you reduce debt without going through bankruptcy.

Texas Debt Relief

Pacific Debt Relief is a debt settlement company that can help you settle debts and pay that settled amount without the stigma, expense, and credit damage that you will find with bankruptcy.

If you are considering filing a bankruptcy case in Texas, give us a call for a free consultation. Our award-winning debt specialists will help you understand all your options. We can offer a fresh financial start without the hassle of bankruptcy.

To learn more about debt settlement, check out this link.

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