Filing for bankruptcy in Texas? While bankruptcy (including the filing process) is primarily governed by federal law, some matters are governed by Texas law, such as which exemptions you can use to protect your property. You can find most of this information online. Keep reading to find out how and where.
(For more articles on the filing process, see Filing for Bankruptcy.)
Before you file a consumer bankruptcy (Chapter 7 or Chapter 13) in Texas, you must complete a credit counseling course from an approved agency. You’ll receive a certificate of completion that you must file with the bankruptcy court, and it must show that you completed the course within the 180 days before you filed your bankruptcy. Once you file bankruptcy, you’ll be required to complete a second course called the debtor education course. You must complete the debtor education course in order to receive a bankruptcy discharge. (To learn more about this requirement, including the rare exceptions, see Credit Counseling & Debtor Education Requirements in Bankruptcy.)
Texas law determines what property you get to keep in Chapter 7 bankruptcy, and help to determine how much you repay unsecured creditors in Chapter 13 bankruptcy. (To learn more, see our Bankruptcy Exemptions area.)
In Texas, you can choose from the federal bankruptcy exemptions, provided under 11 U.S.C. 522(d), or the Texas state exemptions. However, you cannot mix and match the federal and state exemptions – you must choose one or the other.
Texas has a generous homestead exemption and specific exemptions for belongings such as firearms and livestock. To find out more about Texas’ exemptions for your home and car, see The Homestead Exemption in Texas and The Motor Vehicle Exemption in Texas. For a list of other common exemptions in Texas, see Texas Bankruptcy Exemptions.
You can check out the federal exemptions here.
When you file for Chapter 7 or Chapter 13 bankruptcy, you must complete numerous documents, including a bankruptcy petition, schedules disclosing information about your belongings, income, and debts, and several other forms, including a lengthy form known as the “means test” (for Chapter 7) and a similar form for Chapter 13.
(For a list of the forms you must complete, see The Bankruptcy Forms: Getting Started.)
For more information about each of the bankruptcy forms, including how to complete them, see Completing the Bankruptcy Forms.
You must compare your income with the average (median) income for a household that’s the same size as yours in Texas. If your income is below the median, you are eligible to file under Chapter 7 and, if you choose to file under Chapter 13, you have the option to choose a three-year repayment plan instead of a five year plan. This is called the means test.
If your income is above the median, you may still qualify to file under Chapter 7, but first, you’ll have to deduct your expenses and payments on secured debts from your income in order to determine whether you qualify. Most Chapter 13 filers also have to provide this information.
For details about each of these forms, including how to complete them, see:
Look here to find the figures for the means test in Texas:
Texas median income. The median income for a single person with no dependents is $39,673. The median income for a married couple with one child (household of three) is $57,825. You can find the median income figures for other household sizes in here.
Example. Bob and Dawn are married and have one child. Bob earns $30,000 a year and Dawn earns $39,000 a year. Their household income is above the median, so they must complete the full means test and deduct their expenses; however, they are likely to pass the means test and qualify for Chapter 7 because their income is just barely above the median.
Standard deductions. Forms 22A and 22C have a comprehensive list of expense categories, including housing, food, and childcare. For some of those categories, such as childcare, you list the actual amount of your monthly expense. For others, such as vehicle ownership, you list a pre-set amount. Sometimes that amount is a standard for the whole country and other times it varies by county or region.
You can find all of the Texas county and region-specific figures you’ll need for Forms 22A and 22C on the U.S. Trustee’s website at www.justice.gov/ust. Click on “Bankruptcy Reform” and then “Means Testing Information.”
Example. In Texas, the standard amount you are allowed to deduct for utilities is based on the county in which you live. If you live in a single-person household in Wheeler County, your utilities deduction is $417. If you and your spouse live in Jackson County, the utilities deduction is $502. You can find housing expense standards for each Texas county here.
Some judicial districts and bankruptcy courts require bankruptcy filers to complete additional “local forms.” To find out if your court requires additional forms, contact the bankruptcy filing clerk. Some courts post these forms online on the court’s website. (Below you’ll find a link to Texas’ bankruptcy court.)
There are four bankruptcy districts in Texas: the Northern, Southern, Eastern, and Western.
You can use the Court Locator tool on the U.S. Trustee’s website to find bankruptcy court locations and websites. The Texas Bankruptcy Court websites can be found at the following links:
Northern District – Offices are located in Abilene, Amarillo, Dallas, Fort Worth, Lubbock, San Angelo, and Wichita Falls.
Southern District – Located in Brownsville, Houston, Victoria, Corpus Christi, Laredo, Galveston, and McAllen.
Eastern District – Located in Tyler, Plano, and Beaumont. Court may also be held in Lufkin, Texarkana, and Sherman, although there are no bankruptcy offices at these locations.
Western District – Offices are located in Austin, El Paso, San Antonio, Waco, and Midland.