Filing for bankruptcy is often seen as a last-resort option for Texas residents struggling with debt. However, many people who have filed for bankruptcy appreciate the opportunity to start over financially and move forward with their lives. Chapter 7 bankruptcy is often one of the most popular forms of bankruptcy for individuals, as it discharges unsecured debts, offers automatic protection from collectors and creditors and allows people to complete the filing process in only 3 to 6 months. However, this type of bankruptcy is generally reserved for lower-income households who truly have no other options.
Before making any decisions, Texas residents will need to take a means test to determine whether you meet the criteria for a Chapter 7 bankruptcy. First, you will need to evaluate whether your pre-tax yearly income or gross annual income is less than the median income for the same size household in the state of Texas. If your income is lower than this median income, you are automatically eligible file for Chapter 7 bankruptcy.
However, if your income is equal to or higher than the median, you will need to continue to the second part of the means test, which requires you to look at your average monthly income. The test requires you to calculate your average income for the six months leading up to the day you plan to file for bankruptcy. You will need to calculate your disposable income by subtracting your monthly expenses, such as costs of food, clothing and utilities, from your average monthly income. If your disposable income is low enough, you may still be able to proceed with your Chapter 7 bankruptcy.
If you do not qualify for Chapter 7 bankruptcy, do not despair. Your bankruptcy attorney can evaluate your case and come up with other options for you and your family.