Texas Bankruptcy Considerations

While the bankruptcy process in any state is governed by the U.S. Bankruptcy code, there are important differences that could influence a case filing in Texas.

Eligibility

Anyone filing for bankruptcy must pass a means test in order to qualify for a Chapter 7 filing. The difference in Texas bankruptcy cases is simply the median income level used to evaluate whether a person is eligible for Chapter 7. Because each state has their own median income criteria, anyone filing in Texas will be compared to the current median income level listed for Texas.

 Exemptions

When filing for bankruptcy the law allows for debtors to claim some of their property exempt from liquidation under either the federal exemption laws or the laws of their state. Texas exemptions are some of the more lenient of all bankruptcy exemption laws. Offering a higher dollar value for personal property, and an unlimited homestead property value, Texas exemptions are favored over the federal exemption for most local filers.

Foreclosure

The foreclosure process in Texas is unique in that it can be pursued either through the mediation of the court (judicial foreclosure) or outside of the court (nonjudicial foreclosure) through a “power of sale” clause in the contract. Nonjudicial foreclosures can be initiated and completed in a matter of weeks, which makes the timeline for resolving mortgage debts to halt the foreclosure tricky. Depending on the filers mortgage contract, filing for bankruptcy to protect a home from foreclosure may need to be implemented quickly.

Districts

In some cases, it may be necessary for a filer to complete a local bankruptcy form. These are specific to any of the four main bankruptcy districts in Texas. The Northern District covers Abilene, Amarillo, Dallas, Fort Worth, Lubbock, San Angelo, and Wichita Falls. The cities of Brownsville, Houston, Victoria, Corpus Christi, Laredo, Galveston, and McAllen are covered by the Southern District. Coverage under the Eastern District includes Tyler, Plano, Beaumont, Lufkin, Texarkana, and Sherman; whereas the Western District covers Austin, El Paso, San Antonio, Waco, and Midland.