Once your finances begin to spiral out of control in Texas, it may prove hard to get a handle on them again. If your debts reach a point where you no longer see a reasonable way to pay them off, you may want to think about whether filing for bankruptcy might give you a fresh start.
According to Quicken Loans, as a consumer, you may file for one of two types of bankruptcies: The Chapter 7 filing and the Chapter 13 filing.
Chapter 7 bankruptcies
Intended for those who have limited means, Chapter 7 bankruptcies are liquidation bankruptcies. This means that, in some cases, you may have to liquidate, or turn over, some of your assets. Your home may be among the assets you have to turn over when filing for Chapter 7. However, this is not definitive and depends on certain circumstances.
Qualifying for Chapter 7 bankruptcy involves taking a means test. The test looks at your household income and financial obligations from the past six months and compared it against the median household income in Texas.
Chapter 13 bankruptcies
Chapter 13 bankruptcies require you to restructure your outstanding debts so they become more manageable for you to pay down. If you stick to your payback plan and have a mortgage you also keep up with, you typically get to keep your home when you file for Chapter 13.
If you prefer a Chapter 7 bankruptcy filing but fail to qualify for it, you may wait and take the means test again in six months to see if conditions have changed enough for you to receive approval.