It is no secret that Texas doesn’t run with the pack on most issues. We Texans tend to follow our own lead and do things a bit differently than the rest. Bankruptcy is no exception. Texas has some very important variations of bankruptcy laws that we all should learn.
When filing for bankruptcy in Texas, the state laws provide an income restriction that is different than what is found in other states or at the federal level. Further, the amount of debt and income standards for qualification also varies by the type of bankruptcy.In a Chapter 7 bankruptcy, the income limit is $38,801 for a single individual, $55,660 for a family of two and $59,011 for a family of three. Chapter 13 bankruptcies are managed a bit differently than Chapter 7 and the amount of debt is the criteria for eligibility.To qualify for Chapter 13 bankruptcy in Texas, debts on unsecured items (such as credit card and medical bills) must not exceed $336,900; and there is a limit of $1,010,650 for secured debts (such as mortgage and cars).
Texas provides some of the most lenient exemption laws in the country. Texas residents filing bankruptcy have the luxury of protecting more assets than in other parts of the country, or if filing under federal exemption laws. The biggest difference in Texas bankruptcy exemptions and other states is the Homestead exemption, where there is no limit to the value of the home or property than can be protected from creditors. Filing for bankruptcy in Texas can immediately stop a foreclosure and allow the debtor to keep their home while the complete the bankruptcy process. A qualified Texas bankruptcy attorney can guide anyone considering bankruptcy through the process of stopping a foreclosure, preventing wage garnishment and prohibiting collection calls.
Texas bankruptcy laws allow for most unsecured debts to be discharged through a Chapter 7 bankruptcy. The court appoints a trustee to handle any nonexempt assets and manage the payments to be made to any creditors. Once the debts have been eliminated through the court, or repaid through liquidation of nonexempt assets, the court will issue a debt discharge. The debt discharge closes the bankruptcy case and the debtor is no longer liable for the debts. In a Chapter 13 bankruptcy, the court will review and approve a debt repayment plan. Typically, the court will allow three to five years for the repayment plan to be completed. Upon completion of the Chapter 13 repayment plan, the court will issue a discharge of the case.