Texas consumers who feel overwhelmed by debt may want to file for Chapter 7 bankruptcy. The first step for determining qualification is the means test, which uses the median income for the state. Most of the time, making less than this amount means the person can file.
However, there are other conditions that must be met. The person must not have had a Chapter 7 bankruptcy discharged in the past eight years or a Chapter 13 discharged in the past six. The person must also not have had a Chapter 7 filing dismissed because of fraud, misuse of the system, requesting a dismissal because of a creditor’s request to lift the automatic stay or violating a court order. A Chapter 7 consumer bankruptcy petition can be filed by an individual, a couple, a sole proprietor or someone with a business partner if the person is personally liable for the business debts in question. However, a different type of Chapter 7 must be pursued for a corporation, partnership or LLC.
Credit counseling is a necessary part of filing for bankruptcy. This must include a two-hour financial management course. An attorney can help people determine whether they qualify for Chapter 7 or Chapter 13 bankruptcy. Chapter 13 is for higher-income people who can repay some debts.
An attorney may also be able to explain the options for debt relief and the advantages and disadvantages of filing for bankruptcy. Many people think their credit will be ruined if they file, but it can be a way to get a fresh financial start and begin rebuilding credit. While certain debts cannot be discharged, filing for bankruptcy can still help stabilize a person’s finances to make it possible to catch up with those as well.