Texas Bankruptcy Laws

2007-11-12 10:16:16

( Legal )



General Bankruptcy Laws

As an individual debtor, you have the option to file either under Chapter 7 or 13 bankruptcy. In the former, almost all your property, except those that are considered exempt, will have to be foreclosed and liquidated to pay back your creditors. In the latter, you will suspend all your liabilities and instead come up with a repayment schedule that will be satisfactory to your creditors.

However, each state has other bankruptcy policies, especially concerning which properties are classified as exempt. Hence, Florida bankruptcy laws may be different from that of Nevada or other states.

Texas Bankruptcy Process

In support of a recently implemented federal bankruptcy act, Texas bankruptcy laws require you to undergo a six-month credit counseling period in order to determine if you really qualify for bankruptcy. You also undergo a means test to compare your current income to the median income of the state. You can only file for Chapter 7 bankruptcy if your income falls below the median income, or if you are unable to pay at least a quarter of your total debt.

If you choose to file Chapter 13 bankruptcy, you need to submit a repayment plan that the court and creditors will review. It must contain an itemization of all your basic expenses, then a schedule of how much you will pay each creditor during a period of about five years.

Once you have filed for bankruptcy, the Texas court will grant you a stay so that your creditors cannot demand payment from you or foreclose any of your mortgaged properties. The court will also assume control of all your non-exempt properties until bankruptcy proceedings have been concluded.

You will also need to attend several short hearings with the court and your creditors, until you have all come to a settlement.

Exemptions Under Texas Bankruptcy Laws

In Texas, you can choose to base your property exemptions on either federal statutes or Texas bankruptcy laws, or even a combination of both. Homestead should not exceed one acre in size. Personal properties that can be exempted include furniture, heirlooms, food, clothing, horses and other livestock, burial plots and health aids. Your insurance and pension plans, as well as any public benefits are also exempt.

The only exempt parts pf mortgaged properties are the equities you have earned through paid amortizations or due to appreciation in value. To keep a non-exempt property, you need to reimburse the creditor for its value.

Advice for the Debtor

There are other alternatives to filing bankruptcy, such as debt consolidation or negotiating with each creditor for possible changes in arrangements, or refinancing.

Bankruptcy filing is not a trivial matter, so you must decide on which course of action you want to take.

You would also do best by seeking the advice and services of a Texas bankruptcy lawyer, who would be able to provide you with more in-depth analysis of all your options.


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