Chapter 7 Bankruptcy Exemptions
Exemptions are determined by the state where you have been domiciled. Domicile in this sense means the state where you lived. The key time period is the 730 days immediately before the date you file your petition. If you have lived in the same state for the last 2 years before filing, that will be your domicile for exemptions. If you have lived in more than one state in those 730 days , then your exemptions will be determined by the state where your domicile has been located for the 180 days immediately before the 730 days before you filed . So if you havent lived in the same state for the last 2 years:
- Look back 2 years before you filed
- Look back 6 months further
- What state did you live in the majority of those 6 months?
- Thats your exemption state!
If you have not lived in Texas for the last two years you need to tell your attorney immediately. Both the Federal Government and the State of Texas have defined exempt assets. After examining your situation, you and your attorney will choose between the two options. Generally, the options are:
- Federal Exemptions
Am I Eligible To File Bankruptcy In Texas
All bankruptcy debtors must complete a pre-filing credit counseling course and a post-filing debt management course. Additionally, as mentioned, people who want to claim Texas exemptions must be long-term Texas residents. Federal exemptions have residency requirements as well, but these requirements are usually only a few weeks.
Learn The Steps For Discharging Your Debt In A Chapter 7 Filing
Struggling with debt can be overwhelming and frightening. Getting out from under it shouldnt be. In fact, it should be a relief and a fresh start. Rest assured, at The Law Offices of CherylS. Davis, P.C., I will guide you through the Chapter 7 bankruptcy process, which lets you discharge your debt and start from scratch. Because Chapter 7 bankruptcy is costly to creditors, thefiling is not taken lightly, and not everyone is eligible. But I will explain each step and answer all your questions if this filing is your best option for resolving your debt. You deserveto be fully informed, so you can confidently move forward. My firm maintains office locations in El Paso and the Dallas Metroplex area.
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Texas Chapter 7 Bankruptcy Information
In a Chapter 7 bankruptcy you wipe out your debts and get a Fresh Start. Chapter 7 bankruptcy is a liquidation where the trustee collects all of your assets and sells any assets which are not exempt. The trustee sells the assets and pays you, the debtor, any amount exempted. The net proceeds of the liquidation are then distributed to your creditors with a commission taken by the trustee overseeing the distribution.
Certain debts cannot be discharged in a Chapter 7 bankruptcy, such as alimony, child support, fraudulent debts, certain taxes, student loans, and certain items charged. In most Chapter 7 cases, the debtor has large credit card debt and other unsecured bills and very few assets. In the vast majority of cases a Chapter 7 bankruptcy is able to completely eliminate all of these debts.
Reaffirmation agreements can be set aside during the earlier of 60 days after the agreement is filed with the Court, or upon the Courts issuance of an Order of Discharge.
The Automatic Stay Get Protection From Your Creditors
When you file for bankruptcy, the first thing that happens is the automatic stay. This is like putting up a wall between you and your creditors so they cannot call you anymore. The court or the bankruptcy trustee mails a notice to all the creditors you have listed to notify them that you have filed for bankruptcy. This is another very good reason to fully disclose all of your creditors and debts. Should a creditor continue to call you tell them they must speak to your attorney. Be sure to tell your bankruptcy attorney if you have any on-going lawsuits or wage garnishments, so that he or she may call these creditors immediately.
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Bankruptcy Exemptions In Texas
The debt discharge in Chapter 7 is generally achieved through the liquidation of assets. This can lead to many debtors worried about losing their property in a bankruptcy filing. However, the state of Texas offers extensive bankruptcy exemptions, ensuring your important property and assets are protected in bankruptcy.
Some Texas bankruptcy exemptions include:
- Homestead – Unlimited for qualifying residences, with different qualifications for homesteads in the country vs cities
- Motor Vehicle – Can exempt the total value of any one motor vehicle per household member with a license
- Personal Property – Can exempt up to $50,000 total in personal property for single adults, or $100,000 for a family
Other exemptions exist for child support, alimony, health aids, and more.
How Many Times Can You File Bankruptcy In Texas
Can you file bankruptcy more than once in Texas?
The Bankruptcy Courts set no limit on how many times you can file for bankruptcy in Texas, understanding that the program was designed by our federal government to provide people struggling with their debts a fresh start. However, the courts do apply a greater degree of scrutiny to returning filers when it comes to granting discharges of debts.
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Texas Bankruptcy Chapter 7 Cases
If youre filing for personal bankruptcy, the bankruptcy code provides two main options: Chapter 7 and Chapter 13. If you want a straight bankruptcy wherein you allow the bankruptcy court to liquidate your assets in order to pay back your creditors, the bankruptcy chapter for you is Chapter 7, also known as liquidation bankruptcy.
Going through this bankruptcy process allows you to pursue debt relief by eliminating almost all of your debts after your bankruptcy trustee sells some of your personal property and uses the proceeds to pay off one creditor after another.
The Chapter 7 Discharge
A discharge releases individual debtors from personal liability for most debts and prevents the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to many exceptions, debtors should consult competent legal counsel before filing to discuss the scope of the discharge. Generally, excluding cases that are dismissed or converted, individual debtors receive a discharge in more than 99 percent of chapter 7 cases. In most cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case generally, 60 to 90 days after the date first set for the meeting of creditors. Fed. R. Bankr. P. 4004.
The grounds for denying an individual debtor a discharge in a chapter 7 case are narrow and are construed against the moving party. Among other reasons, the court may deny the debtor a discharge if it finds that the debtor: failed to keep or produce adequate books or financial records failed to explain satisfactorily any loss of assets committed a bankruptcy crime such as perjury failed to obey a lawful order of the bankruptcy court fraudulently transferred, concealed, or destroyed property that would have become property of the estate or failed to complete an approved instructional course concerning financial management. 11 U.S.C. § 727 Fed. R. Bankr. P. 4005.
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Debts That Cannot Be Discharged
Several types of unsecured debts cannot be discharged in a Chapter 7 in Fort Worth. These include but are not limited to:
- Child support
- Some tax debts
- Fines, penalties, or restitution owed to the federal government
Additionally, debts that you did not include in your filing paperwork cannot be discharged therefore, being forthright about all of your debts, and researching to find old debt are in your best interest. Getting a copy of your credit report may help to refresh your memory about debts you may have forgotten or debts that were sold to other creditors. You may get one free credit report per year at:
At The Vida Law Firm, we have extensive experience is handling IRS debt. Whether or not you will be able to discharge part or all of your IRS debt depends on how old it is, whether you filed a return, whether you filed your return on time, and whether the IRS has filed a lien. To help us answer your questions about your IRS debt, please obtain a copy of your tax account transcript for the year in question at:
If your debts are largely made up of non-dischargeable debts, particularly IRS debt, a Chapter 13 bankruptcy may be more appropriate option to pursue an experienced attorney can advise you on your options and help you determine what is best for your particular situation.
Personal Liability For Corporate Or Llc Debts
Even though corporate entities and LLCs are responsible for their own debt payment, individuals can still find themselves liable for business obligations. Here are a few situations that can give rise to personal liability.
- Trust fund taxes. Responsible parties can be held liable for “trust fund taxes,” such as taxes withheld from an employee’s income.
- Alter ego claims. A creditor can go after the personal assets of an individual if it can prove that the corporation or LLC was a sham or an alter ego of the shareholder. Establishing this type of claim involves filing a lawsuit to pierce the corporate veil that shields a stakeholder’s private assets from the creditors of the business. A successful suit opens up more assets from which the creditor can collect.
- Other fraud claims. Most fraud involves an attempt to hide money from creditors. If proven, an individual would be required to make the harmed party whole , and possibly face criminal penalties, too.
- Personal guarantees. An individual can agree to be responsible for business debts by cosigning or personally guaranteeing a loan or by pledging personal assets as collaterala common practice when a business lacks a profit history or valuable assets.
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Chapter 12 Bankruptcy For Texas Farmers And Ranchers
Chapter 12 of the U.S. Bankruptcy Code is a specialized type of bankruptcy designed for family farmers, ranchers, dairy owners, poultry and livestock producers, as well as family fishermen. It helps you save your farm and business by allowing you to reorganize your finances, reducing and restructuring your debt.
If you qualify, Chapter 12 provides some very important benefits, often better than those available in either Chapter 13 or Chapter 11, the other two possible options for reorganizing a business.
How Bankruptcy Works In Texas
In most respects, filing for bankruptcy in Texas isn’t any different than filing in another state. The bankruptcy process falls under federal law, not Texas state law, and it works by unwinding the contracts between you and your creditorsthat’s what gives you a fresh start.
But Texas’s laws come into play, too, in a significant way. They determine the property you can keep in your bankruptcy case. You’ll also need to know other filing information, which we explain after going over some basics.
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Where Do I File For Bankruptcy In Texas
Texas has three bankruptcy court districts, the Northern, Southern, and Western. Each district has several locations. Generally, people who live in or near Dallas, Tyler, Waco, or Texarkana are in the Northern District. People who live in or near Houston, San Antonio, Austin, Corpus Christi, or Brownsville are typically in the Southern District. Everyone else is probably in the Western District.
Mail Documents To Your Trustee
Once your case has been filed, a bankruptcy trustee is appointed to handle your case. The trustee will be your primary point of contact during your Texas bankruptcy, especially if youâre filing without a bankruptcy lawyer. The trustee is also the person that will be asking you questions at your 341 meeting.
The Bankruptcy Code requires that you send a copy of your most recent federal income tax return to the bankruptcy trustee before your 341 meeting. Your trustee may also send you a separate letter asking for additional documents or information from you. If you owe child support or alimony and you’re behind on payments, the bankruptcy trustee will need the name and contact information of the recipient.
Since you have to cooperate with the bankruptcy trustee, itâs important to keep an eye out for any correspondence you may receive from them.
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Will I Be Eligible To File For Chapter 7 Bankruptcy In Texas
Thanks to the bankruptcy reforms of 2005, debtors seeking Chapter 7 protection must deal with the means test. The means test was put in place to make it more difficult to file Chapter 7 bankruptcy when debtors have the disposable income to repay some of their debts. As a result, those earning more than the median income in their state must pass the means test in order to qualify for Chapter 7 bankruptcy.
For a single filer in Texas filing bankruptcy after May 1, 2020 their income must be less than $49,996 or they will have to analyze their disposable income under the means test. For a couple, that number is $65,708.
It is important to remember that the means test calculates median income based on household size, so if your household is larger than a single individual, your median income will be compared against a family with a similar headcount.
A good bankruptcy lawyer can walk you through the means test and help you determine whether you are eligible to file for Chapter 7.
How Can You Benefit From Getting Legal Assistance
- You can better understand the different bankruptcy options and how the means test works so that you can have an idea of what assets you could lose and how the bankruptcy petition could turn out for you.
- You can be guided on how to file for bankruptcy properly, by filling out bankruptcy forms and collecting accompanying documents so that you avoid unfortunate mistakes.
- You can be counseled on the different bankruptcy exemptions available to you so that you end up choosing which ones best suit your bankruptcy case.
- You can count on support and representation throughout your bankruptcy journey.
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Do You Qualify For Chapter 7 Bankruptcy
To be certain you are eligible to file for Chapter 7 relief, you will need to meet certain income requirements:
- If your annual income is below the median income in Texas for a household of your size, you may automatically qualify to file for Chapter 7 bankruptcy.
- If your income is above the median, you must then pass the means test.
The means test examines whether your debts and expenses exceed your ability to pay them back. If it is determined that you can afford to pay your debts, you must instead file for Chapter 13 bankruptcy. Additionally, you must not have filed for Chapter 7 bankruptcy and received a discharge in the previous eight years.
Texas Bankruptcy Exemptions And Law
COVID-19 Update: Most Texas bankruptcy courts are open on a limited basis. Filing clerks and records clerks are usually available. Visitors must generally abide by coronavirus restrictions, such as facemask and social distancing rules. Most judges are conducting hearings online. Most trustees are doing the same thing.
Other people are more concerned about how COVID-19 might affect an existing case. Some debtors are unable to make their monthly Chapter 13 payments. Others are unsure how a bank’s coronavirus mortgage deferral might affect their payment amount. Texas Law Help provides more information about these issues.
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Your Income Is Significantly Greater Than The Median Income For A Family Of Your Size In Your State
In order to file for Chapter 7 bankruptcy under BAPCPA, you must pass the Chapter 7 means test, which compares your income to the median income level where you live. If you make substantially more than the median family of your size, youre unlikely to qualify for Chapter 7 protection. In fact, if you have a steady, regular income, you may benefit more from a Chapter 13 filing. Your bankruptcy lawyer will be able to help you make this determination.
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How Will Chapter 7 Bankruptcy Affect My Credit
Before Erin files your bankruptcy case, Erin and her staff review your credit reports with the three credit reporting agencies, Experian, Transunion, and Equifax, and make sure that any creditors who have posted any derogatory remarks on your credit reports are included in your bankruptcy case filing. When you receive your bankruptcy discharge, Erin sends that Discharge Order to the three credit reporting agencies, asks them to correct your credit report to show that all of these debts have been discharged and you are then sent corrected credit reports so that you can begin your financial fresh start. Erin provides this service to all her clients, for no extra charge.