How to File Bankruptcy in Texas
If you’re struggling with overwhelming debts, you deserve a fresh financial start. Bankruptcy may provide the best solution to your current situation. Before seeking bankruptcy relief, it’s important to review some of the basics.
Here are the main steps to follow when filing for bankruptcy in Texas:
- Assess your Financial Situation
- Take the Means Test
- Examine Foreclosure Notices and Lawsuits
- Complete Credit Counseling
- File Your Bankruptcy Petition and Schedules
- Attend the Creditors Meeting
- Discharge Your Debt
How Does Filing for Bankruptcy Work in Texas?
Here are the main steps involved in filing for bankruptcy in Texas:
If you’re contemplating a bankruptcy to reduce or eliminate your debts, it’s important to carefully review your current financial situation. Is it possible to get your debt under control? Are your debts in the collection stage? Are you facing lawsuits and judgments?
If there’s no end in sight, bankruptcy may be the best option. You should consult with an experienced bankruptcy lawyer that will treat you with dignity and respect and explain the bankruptcy process in easy to understand terms. The Westbrook Law Firm, PLLC can help. We offer free consultations at several convenient locations in Houston and the surrounding areas.
In 2005, Congress amended the U.S. Bankruptcy Code and added the “means test”, which evaluates your income and expenses for the 6-month period prior to filing. The test helps determines if you qualify for Chapter 7 relief or if you have to pay something to your unsecured creditors through Chapter 13.
The means test is extremely complex and can lead to serious problems in your bankruptcy if it’s not completed properly. If you make an error on the means test, your petition could be denied, dismissed or you could even face criminal penalties. To ensure the means test is submitted properly, along with the other bankruptcy documents, it’s important to hire an experienced bankruptcy attorney. The Westbrook Law Firm deals with the means test on a daily basis. Let our legal team help you through this complex process.
If you’ve received a notice of foreclosure, please call our Firm at once. If you fail to act before the sale, you will probably lose your home and have few options going forward. You could also be sued for the shortfall after the sale, which can be tens of thousands or more.
Our Firm can assist you with a Chapter 13 bankruptcy, which can stop the foreclosure process and allow you to catch up on the mortgage arrears over a 3 to 5 year repayment plan. We have helped numerous homeowners save their homes through bankruptcy. Give us a call today to protect your most important asset.
Before filing a consumer bankruptcy case, you’re required to obtain credit counseling from an approved and accredited agency. You must complete a financial management course after filing, which can typically be done through the same agency. When you hire our Firm, we will provide a list of several approved agencies. The good news — you can complete the course online, at your convenience.
File Your Bankruptcy Petition
When preparing the bankruptcy petition and schedules, you must accurately describe your financial situation, including income, expenses, property, and debts. Our Firm provides the necessary intake forms to facilitate this important process. Bankruptcy is all about disclosures. The need for total accuracy is critical to obtain approval from the Court and avoid issues in the case. A qualified attorney can guide you through this process and ensure everything is submitted as accurately as possible.
Several weeks after filing, you will need to attend a scheduled meeting of creditors (sometimes called the “Creditors Meeting” or “341 Meeting of Creditors”). Your creditors have a right to attend this meeting and ask questions about your financial situation and the documents on file with the Court. In most cases, the creditors will not attend the meeting, and it’s more of a formality to answer questions submitted by the Trustee.
The Trustee will confirm your identity (through your drivers license and social security card), have you swear to your answers under oath, and ask some basic questions about the filed documents. Your attorney will help you prepare for the meeting and advise of the likely questions. If everything has been filed properly and you have disclosed things correctly, the meeting should take less than 10 minutes.
Discharge of Debt
If you submit everything correctly, attend the Creditors Meeting, complete the financial management course, and there are no objections filed, you will be eligible for a discharge of your debts. A discharge eliminates your legal liability on the debt, meaning you don’t have to pay the debt. In Chapter 7, the discharge will occur within a few months after filing. In Chapter 13, the discharge will occur at the end of your confirmed repayment plan (between 3 and 5 years).
The debts that can be discharged in bankruptcy include:
- Credit card debt
- Medical bills
- Overdue utility bills
- Payday loans
- Personal loans
- Other unsecured consumer debt
Rebuild Your Credit After Bankruptcy
After the Court concludes your bankruptcy and you receive a discharge, you can begin rebuilding your credit. Credit scores typically improve upon a discharge, as your debt to income ratio changes and shows a positive going forward.
Most of our clients are offered secured credit cards shortly after a discharge. These cards are a good starting point for rebuilding your credit. Eventually, you can obtain a true credit card, although you should use these cards wisely and pay the balance each month to avoid incurring new debt. If you live within your budget, and pay your bills on time after a bankruptcy is concluded, your ability to get new credit is much better. Your positive payment history is the secret to rebuilding your credit and raising your credit score. In many cases, you will start seeing an improved score within 12 to 18 months after a bankruptcy discharge.
Am I Eligible to File for Chapter 7?
If your primary debts are unsecured (such as credit cards, medical bills, and payday loans), Chapter 7 typically offers the best debt relief, as you are not required to pay the debt back. Qualifying for Chapter 7 relief is not automatic. You must complete the means test and prove that you do not have the means to pay your creditors. If you complete the means test without legal assistance, you could miss out on some critical deductions that could help you qualify. The best advice is to meet with an experienced bankruptcy attorney to determine if Chapter 7 is the best option for your situation, and if so, whether you qualify under the means test.
To learn more about your bankruptcy options, please call the Westbrook Law Firm today. The road to financial freedom starts here.