Dallas County Attorney

If your finances are in a mess and too many debts piling along, filing bankruptcy in Texas may be an option. This is an option when you have budgeted and still:

• Cannot envision your own self getting out of debt even after 5 years.
• Have been paying the bare minimum on all bills
• Got legal notices that loans and mortgages are being foreclosed
• Had severe financial setback or were at the losing end of a costly divorce proceedings
• Lost nearly all your savings in medical bills

Though there is no hard and fast rule for filing for bankruptcy, you do need to know how much it cost to file bankruptcy in Texas as you might still be responsible for some things such as:

• Alimony and child support
• Government penalties and fines
• All purchases above $550 on luxury goods that were purchased within the period of 90 days after filing for bankruptcy
• Recent tax dues
• Student loans incurred

Filing for bankruptcy

There are only 2 laws under the rule book for filing for bankruptcy in Texas and if you are looking to seek more information, it is best to consult Dallas bankruptcy attorneys. However, you can file bankruptcy can be filed under Chapter 7 and Chapter 13. Chapter 7 deals with straight bankruptcy which is used to take away all debts and start with a fresh slate. Chapter 13 is known as a Wage Earner Bankruptcy and sets up a repayment plan where you get to repay your debts over a set time period of several years.

·       Chapter 7 Bankruptcy

Liquidation or as specified in Chapter 7 is considered the quickest way of filing for bankruptcy. This is available to corporations, married couples, individuals and partnerships. As appointed by the court, a trustee sells/auction off the non exempt property and the monetary proceeds are used to pay off the creditors. Additionally, you need to pass the Means Test which translates as you are eligible to file under Chapter 7 if you make less than the median income for an average Texas family.

For filing under this chapter, you need to have a ‘Statement of Financial Affairs’ which contains extensive details and schedules of all debts which include all due debts and taxes, home mortgages and automobile loans and all unsecured loans. The statement of Financial affairs also needs the names and addresses of all the creditors and a list of all real estate assets and personal property that you hold.

·       Chapter 13 Bankruptcy

Ass a sole proprietor or an individual, you can file under Chapter 13 bankruptcy so that you are given more time to pay off your debts or within 5 years. Instead of completely erasing all debts, this Chapter gives you the option of rearranging them under one head and repaying them over a longer period. Usually people who opt for this type of bankruptcy have:

• Loans and mortgages that they would like to paid off instead of losing out on property and homes
• Those who have moral values ingrained that debts need to be paid off
• A variety of student loans, back taxes and child support that cannot be eliminated under Chapter 7 bankruptcy

To file under Chapter 13 bankruptcy, you need to have a steady job or income with some savings every month or left over income after covering your basic necessities to pay off the debts in smaller installments. The installments are set by the court as per the IRS regulations to individually cater to each person’s repayment capabilities. However, for filing Chapter 13 Texas bankruptcy petition with a proposed repayment plan of three to five years.

First meeting of Creditors

When you file for bankruptcy in Texas, you appear at the ‘First Meeting of Creditors’ or the ‘341’ meeting where the trustee asks you related questions about debts and loans incurred. Your financial position is reviewed to see if you can payback some amount to your creditors.

Exemptions Available

However even after filing for bankruptcy in Texas, under the federal exemptions or as per Texas exemptions, you are allowed to keep some things namely:

• Home up to the value of $20,200
• Alimony and child support
• Pensions and retirement benefits
• Jewelry costing up to $1,350
• Vehicle costing up to $3,225
• Health aids
• Personal injury compensations up to $20.220

Under Texas exemptions, you are allowed to keep:

• $30,000 worth of personal property
• Home not over 10 acres in town, livestock, sporting equipment, home furnishings, family heirlooms, food, clothing, tools of trade, health aids
• Social security benefits, disability and unemployment benefits
• Child support and alimony