How to File for Bankruptcy in Texas

th the ever-increasing use of purchases through credit, and the current economic downturn in the United States, bankruptcy filings are becoming more commonplace. Although, Texas ranked only 41st in 2007 of bankruptcy filings per capita, it is important to be aware of the state specifications to bankruptcy law. The forms and circumstances of bankruptcy are outlined by the laws of the federal government. However many states, like Texas, have added to or modified these regulations. As Chapter 7 bankruptcy is the most commonly used by individuals and businesses, most changes occur within those regulations.

Finding a Bankruptcy Attorney

Though Chapter 7 bankruptcy is the most common, it is not always the best choice for every given individual or business. In addition to Chapter 7, Chapter 11 and Chapter 13 are also common forms of bankruptcy. These varying forms have differing benefits, and varying state specific laws. To accommodate these complications, debtors are strongly encouraged to find an attorney who specializes in bankruptcy. There are many online services available to help this process, however personal or business referrals are often the most useful.

Bankruptcy Options

After consultation with a bankruptcy attorney or other legal professional, most bankruptcy cases will follow one of the following options.

• Chapter 7, commonly known as liquidation bankruptcy, will remove the majority of debts from an individual or business. The drawback is that all possessions will be repossessed, aside from exemptions stipulated by either state or federal law, to be chosen by the debtor.
• Chapter 13, or rehabilitation bankruptcy, will only organize one’s debt into a payment plan arranged through a bankruptcy court. Payment plans last from three to five years. It can be utilized effectively by those who earn enough money, but are struggling with some debts and organizing their finances.
• Chapter 11, another form of rehabilitation bankruptcy, is designed specifically for businesses, allowing them to continue functionality while going through the process of bankruptcy, and recovery through their repayment plan.

Texas Exemptions

Exemptions are the major differing factor among state bankruptcy policies. Texas law has a common method for exemptions through Chapter 7 bankruptcy, allowing for exemptions through a choice of either the federal or their state regulations, which are:

Filing the Petition

After the best-suited method for bankruptcy is decided, the bankruptcy petition can be filed to the bankruptcy court. This is done by an inventory of all of the debtor’s assets. This process should be done very accurately to avoid the possibility of bankruptcy fraud, especially when filing for Chapter 7 bankruptcy. In addition, a “means test” must be passed to gain eligibility for Chapter 7. Generally, after 20 to 40 days, if the petition is accepted, creditors will be notified, and a “341 meeting” will be arranged with them by a bankruptcy trustee to assess the situation. This meeting is especially important for Chapter 11 and 13 bankruptcy, as the repayment plan will be created.