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Texas Bankruptcy Laws

Texas Bankruptcy Laws should be known by every resident of the state of Texas. In this modern era of credit readily available for every citizen of the state of Texas, there is a likely ramification of bankruptcy declaration. When financial burdens become too much to bear, the right of a Texan to avail of bankruptcy protection is imminent.

However, Texas bankruptcy laws have undergone a lot of changes since its inception and were intensified in 2005 via the Bankruptcy Abuse Prevention and Consumer Protection Act. Not only did it require more paperwork and requirements in filing for bankruptcy but the eligibility of a debtor does not depend on the debt the person has incurred, on the contrary, it now depends on the household’s yearly income.

It is fair to give debtors ample warning that if you want to apply for bankruptcy, a little knowledge of the rules and provisions governing the state of Texas would be very helpful, much more so if you employ an expert lawyer’s services. This lawyer should be qualified to practice in the state of Texas and should be well-versed in bankruptcy cases. This way you are assured of a higher chance of bankruptcy approval.

For every bankruptcy case submitted into the bankruptcy courts, a corresponding trustee is randomly assigned by the court to help with the proceedings. There are two types of bankruptcy program that an individual, a married couple, or a family can apply for under the state of Texas. The first and most common option is Chapter 7 or known as liquidation bankruptcy. In this bankruptcy program, the debtor’s dischargeable debts like credit card bills and medical debts are eliminated. A debtor’s non-exempt assets may be liquidated to pay off the debts; however, the state provides certain provisions for assets like the debtor’s home, vehicle, and personal belongings. The process of Chapter 7 eligibility is rigorous and a debtor should meet the state’s criteria. Once you have passed this though, you can now have a fresh financial start.

In the event that your application for Chapter 7 is denied, the court may recommend Chapter 13 bankruptcy protection program. Instead of discharging your debts, you are to pay it in a three- to five-year period. The debtor presents a repayment plan in court outlining the fine points on how to pay all the creditors within the allocated time period. A means test will still be administered by the trustee, but its purpose is to determine the time period on which you have to pay all your debts. A three-year period is given for debtors whose monthly income is below the state’s median income level, if it exceeds the state median, then the debtor is assigned the five-year period.

During the bankruptcy proceedings, as stated above, non-exemptions are liquidated, and exemptions are protected from the creditors. Texas bankruptcy laws define the following assets as exemptions:

• A home not greater than 10 acres in an urban setting or 200 acres in the rural area or 200 acres for family;
• Personal property for individuals at $30,000 and for head of household at $60,000;
• A number of farm animals; and
• Benefits like health aid, disability benefits, retirement plans, and other benefits.

Discuss with your lawyer all the scenarios and problems you might encounter and ensure that all necessary papers are filled out appropriately.