Bankruptcy FAQ
Answers to your most pressing questions about Chapter 7 bankruptcy in Texas
Chapter 7 bankruptcy is a legal process governed by 11 U.S.C. § 701-784 that allows individuals and businesses to eliminate most unsecured debts through a fresh start. The process takes 3-6 months, with most Texas cases classified as "no asset" cases where filers retain their belongings.
Qualification requires passing the means test comparing your income to Texas medians. As of November 2025: 1 person = $65,123; 2 people = $84,491; 3 people = $96,728; 4 people = $114,938; plus $11,100 per additional person. Social Security income is excluded. Two-year Texas residency is required for state exemptions.
The federal court filing fee is $338 (installment payments available; waivers possible for low-income filers). Credit counseling costs $15-50; debtor education course costs $15-50. Attorney fees vary by case complexity. Our firm offers affordable payment plans.
Chapter 7 can discharge most unsecured debts including credit card balances, medical bills, personal loans, and utility arrears. Certain debts like student loans, recent taxes, child support, and alimony generally cannot be discharged. During your free consultation, Attorney Don Hood will review your specific debts and explain which ones qualify for discharge.
Timing is measured from prior filing date to new filing date: You must wait 8 years from your prior Chapter 7 filing date before filing another Chapter 7 case.
Texas law provides generous exemptions for personal property. In most cases, filers retain household goods, furniture, appliances, electronics, clothing, food, farming equipment, and tools of trade. Filers can choose between Texas or Federal exemptions.
Texas offers one of the strongest homestead exemptions in the country, protecting unlimited home equity on properties up to 10 acres urban or 100 acres rural. Filing immediately stops all foreclosure actions under 11 U.S.C. § 362. Regular mortgage payments must continue.
Texas exemptions protect one motor vehicle for each licensed household member. The automatic stay stops repossession immediately. Vehicle loan payments must remain current. Underwater vehicles can be surrendered with deficiency debt discharged.
ERISA-Qualified Plans like 401(k)s and pensions are fully exempt. IRAs receive protection up to $1,512,350. Social Security benefits are fully protected. Government pensions are typically fully protected.
Typically yes. The trustee reviews your account balance at filing to identify non-exempt funds. Money from exempt sources such as Social Security, disability benefits, child support, or retirement distributions is protected even if held in your bank account.
Secured debt is backed by collateral that the creditor can claim if you don't pay (examples: mortgages, car loans). Unsecured debt is not backed by any collateral (examples: credit cards, medical bills, personal loans). Chapter 7 typically discharges unsecured debts entirely.
Non-dischargeable debts include: income taxes less than 3 years old, fraudulent debts, child support and alimony, federal student loans, DUI/DWI judgments, post-filing debts, and some HOA fees.
Yes. The automatic stay under 11 U.S.C. § 362 takes effect immediately upon filing and stops virtually all collection actions including wage garnishment, bank levies, lawsuits, foreclosures, repossession, and creditor contact.
Immediately upon filing your bankruptcy petition. The automatic stay prohibits all creditor contact the moment your case is filed. Official notice is sent to all creditors. Violations result in contempt charges, sanctions, and potential damages to you.
Absolutely. Bankruptcy can improve your credit profile by replacing high outstanding balances with zero balances. Timeline: immediately post-discharge (secured cards); 6-12 months (measurable improvement); 12-18 months (regular credit products); 2+ years (mortgage qualification possible).
Chapter 7 can remain on your credit report for up to 10 years from the filing date. However, impact diminishes significantly over time. Most people see meaningful improvement in their credit scores within 12-18 months of discharge.
Cards with discharged balances will almost certainly be canceled. Even zero-balance cards may close. Some issuers offer reaffirmation agreements. New credit products become available post-discharge.
Federal law strictly prohibits employment discrimination based on bankruptcy filing. 11 U.S.C. § 525(b) protects both private and public sector employees. Employers cannot fire, demote, or discriminate based solely on bankruptcy filing.
The typical timeline from filing to discharge is 3-4 months. Steps include: credit counseling before filing, petition filing ($338 fee, automatic stay takes effect), 341 meeting (~30 days post-filing, 10-15 minutes), debtor education course, and discharge order (~60 days after 341 meeting).
While pro se filing is legal, risks include petition errors causing dismissal, lost exemptions resulting in asset loss, denial of discharge, and tax complications. An experienced bankruptcy attorney ensures your petition is accurate, maximizes your exemptions, and protects your property. Call (888) 239-7259 for a free consultation.