Bankruptcy in Texas: Understanding Your Options

Bankruptcy is a legal process that allows individuals and businesses to seek relief from overwhelming debt. In Texas, bankruptcy laws provide specific guidelines and protections for debtors facing financial challenges. Whether you're considering bankruptcy as a solution or need to understand your rights, it's essential to know your options and how they apply in the Lone Star State.

Types of Bankruptcy in Texas:

Chapter 7 Bankruptcy: Commonly known as liquidation bankruptcy, Chapter 7 allows individuals and businesses to discharge most unsecured debts. This process involves selling non-exempt assets to repay creditors, though Texas exemptions often allow debtors to protect essential property.

Chapter 13 Bankruptcy: Under Chapter 13, debtors with a regular income can reorganize their debts through a manageable repayment plan. This plan typically spans three to five years, allowing debtors to catch up on missed payments while keeping their property.

Texas Bankruptcy Exemptions:

Texas offers a range of exemptions that protect certain types and amounts of property from liquidation in bankruptcy. These exemptions include:

Homestead Exemption: Texas has a generous homestead exemption that protects an unlimited amount of equity in a primary residence on up to 10 acres in a rural area or 1 acre in an urban area.

Personal Property: Exemptions cover personal property such as vehicles, household goods, clothing, and certain retirement accounts.

Wage Exemption: A portion of wages earned but not yet paid is exempt from garnishment to protect the debtor's income.