Filing for Chapter 7 bankruptcy can be a valuable option for corporations and limited liability companies (LLCs) that are going out of business. But this option isn’t used as frequently as one might think. Because these types of businesses don’t receive a bankruptcy discharge, filing for bankruptcy has limited value. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property. Chapter 7 Eligibility To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 11 . If you would like to file a Chapter 7 bankruptcy you must pass the Texas means test. The test only applies to higher income filers which means that if your income is below the Texas median for your household size you are exempt from the test and may file a Chapter 7.
You can selectively reaffirm your debts — you can state that you wish to keep the house and the furniture, but that you want the car and the jewelry to go back to the respective Creditors. Approved Texas Debt Education Courses. This site is for informational purposes only. For legal advice please consult a legal professional. If your income is higher than the Texas median you will need to complete the means test calculation to determine if you can pay back a portion of your unsecured debts through a Chapter 13 bankruptcy.
If your debts are not primarily consumer debts then you are exempt from the means test. You are also exempt from the means test if you are a disabled veteran and incurred your debt primarily during active duty or performing a homeland defense activity.
If your currently monthly household income is less than the Texas median income for a household of your size there is a presumption that you pass the means test and are eligible to file a Chapter 7 bankruptcy. Your average household income is determined by averaging your monthly income over the last six calendar months.
If you are over the median income limit and your income has declined over the last six months, then waiting one or more months might bring your income under the median level for Texas.
Once you determine your average monthly income you multiply that by 12 to determine your annual income for the purpose of Texas median income test. The forms you have to complete when filing Chapter 7 bankruptcy in Texas are either national forms and the same in every state or local forms that are specific to your district. Both sets of documents can be obtained for free online. Some of the information required for the bankruptcy forms to be ready for filing Chapter 7 in Texas is general in nature.
Where you live now and where you've lived in the last 3 years, who your employer is and how much you have earned in the last couple of years, your monthly expenses, a list of your debts and another list of your assets. Other information needed to complete your bankruptcy forms is more technical, such as the exemptions that you can claim to protect your assets.
The benefit of working with an attorney or using Upsolve to help you file bankruptcy in Texas is that you may be able to fill in a more user-friendly questionnaire instead.
You are signing the forms under oath and penalty of perjury, and that is nothing to be messed with either! You are probably wondering why on earth someone that has to file Chapter 7 bankruptcy in Texas has to pay a court filing fee in order to do so. After all, you are seeking the protections of the bankruptcy court because you don't have enough money. Keep in mind that everyone's case is different. What matters is whether your monthly income allows you to meet your monthly living expenses while leaving you enough money to pay down your debt.
Folks unable to do so may end up filing bankruptcy in Texas, even though they make much more than you do. In other words, someone making 3 times as much as you do might be in the exact same position you are in that they cannot meet all their monthly expenses. You can fill out the necessary paperwork to obtain a waiver, or request permission to pay your filing fee in installments before you go to court so you know you have everything ready to get your Texas bankruptcy started. The last step before filing Chapter 7 bankruptcy in Texas is printing all the forms to be filed with the court.
You want things to go smoothly when you are at the courthouse, so it makes sense to be methodical and take your time putting together your packet, paying close attention to Texas bankruptcy laws. This is especially true if you are filing without an attorney, as you will likely have each form saved as a separate file on your computer.
Do not print multiple pages on one sheet and do not print on both sides of the paper. Since it will be helpful later to have a hardcopy of the set of forms that you file with the Texas bankruptcy court, take a moment at this stage to either print a complete second set, or make a copy of the one set you already printed.
Once you have your complete set of bankruptcy forms, your credit counseling certificate and your filing fee or application to have the fee waived , you are ready to go to the court to begin the process of filing Chapter 7 bankruptcy in Texas. There are four federal districts in Texas and all of them have several offices covering the Lone Star State.
Once you determine what district you live in see below for more on the different districts , visit that district's bankruptcy court website to find out the locations available for filing your case.
Since filing bankruptcy is stressful enough as it is, before you go to the courthouse make sure you know where to go, where to park, and when the clerk's office is open to the public.
Once you are at the courthouse, find the clerk's office to file your Texas bankruptcy. Generally, they will take it from there and make sure you have everything you need in your packet. Bring your second copy of all the documents with you when you go and ask the clerk to endorse or stamp it for you.
That way, you have your own paper copy with proof that you completed all steps for filing bankruptcy in Texas. Shortly after you are done filing Chapter 7 in Texas, a trustee will be appointed to handle your case.
The trustee is also the person that will be asking you questions at your meeting. The Bankruptcy Code requires that you send a copy of your most recent federal income tax return to the trustee before your meeting. Your trustee may also send you a separate letter asking for additional documents or information from you. Since filing bankruptcy in Texas means cooperating with the trustee, it is important to keep an eye out for any correspondence you may receive from your trustee.
Everyone in a Texas bankruptcy must take a course on financial management after their case is filed. This is the second of two courses you are required to complete when filing bankruptcy in Texas. It is similar to the course you took before you went to the court to file your forms. This course is intended to teach you how to budget and use your money after your case is filed.
Of course, many folks find themselves filing Chapter 7 in Texas due to circumstances entirely outside of their control. Regardless, everyone who wants to obtain a discharge of their debts as a result of their Texas bankruptcy must take the course. As with the first course, it is important to use an approved provider. Once done, you will receive a certificate of completion that has to be filed with the court.
The meeting is a meeting with the Chapter 7 trustee that is handling your case. It is called a meeting because it is required by Section of the bankruptcy code. Everyone filing Chapter 7 in Texas must attend a meeting.
The most important part of the meeting, in addition to attending it, is bringing a valid picture ID and acceptable proof of social security number. You should review the paperwork you provided to the court when you filed your Texas bankruptcy in order to prepare for your meeting.