When filing Texas bankruptcy, it's important to understand both Texas laws and federal laws. This guide focuses on helping Texas filers with eligibility, exemptions, and rules.
Texas Bankruptcy Eligibility
All state median incomes govern Chapter 7 eligibility, making each state income limits different. Texas is on the low end for incomes, so if you make a lot of money, you may be forced to file Chapter 13 instead of Chapter 7. For one person, your income must be below $38,801; a family of two is $55,660; a family of three is $59,011; and a family of four is $66,145.
Federal laws govern all states, including Texas, for Chapter 13 bankruptcy eligibility. Your unsecured debts cannot exceed $336,900, which are monies owed such as credit and medical. Your secured debts cannot be higher than $1,010,650, which are monies owed on possessions such as your home, car, and other properties.
Texas Homestead Exemption
The Texas homestead exemption is often quoted as being the most helpful of all state exemptions laws. Texas bankruptcy law protects almost everyone from losing their home. There is no dollar limit if eligible, which most are. It does not matter if you own $50,000 or $500,000 home. If you meet the guidelines of the Texas homestead exemption, the home is protected.
What rules do you have to follow? First, you must have lived in Texas the past two years. If you live in a city or town, the home size cannot exceed one acre. If you live outside of any cities, you are limited to 200 acres. Also, if you bought the home recently, you may not qualify for a full exemption (if you bought it less than 3.3 years ago). If you do not qualify for a full exemption, you can apply under the federal homestead exemption, which has a limit of $125,000.
If You File Chapter 7
We went over the Chapter 7 eligibility requirements for Texans. If you file this way, you can discharge most major unsecured debts. A Texas court will appoint a trustee to liquidate any nonexempt assets you have to pay to creditors. You do have options for protecting nonexempt assets; a Texas lawyer can help here.
If You File Chapter 13
If you file Chapter 13 bankruptcy, you can delay if not completely stop a pending foreclosure on your home. You have 3-5 years to pay back all or some of your unsecured and secured debts.
If you are experiencing creditor harassment, this too is no different than other states. You have rights; there are federal laws designed to protect you. For example, if a creditor calls before 8 AM or after 9 PM, they are breaking the law.
Who can help?
Unsure if the Texas homestead exemption applies to you? Are you worried about an immense medical or credit card debt you have no means of paying? Hiring an experienced Texas bankruptcy lawyer is your first step. He or she can protect your home, other assets, income, and stop any creditor harassment.
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