There are certain requirements that people must meet prior to and during the bankruptcy filing process in Texas.
The U.S. Bankruptcy Court for the Western District of Texas illustrates that the number of filings in Waco and across the state have been trending downward since 2009. The majority of these filings pertain to Chapter 7 and Chapter 13, which are the options for individuals seeking relief.
There are a number of benefits to filing for bankruptcy for people who have no other means of improving their financial situation. Prior to filling out the paperwork, consumers should know what will be expected of them.
Knowing which filing is right
One of the most important steps in filing for bankruptcy is knowing which option, Chapter 7 or Chapter 13, will best benefit the consumer. In a Chapter 7 filing, debts may be fully discharged, whereas with a Chapter 13, they are reorganized into a payment plan.
However, it is not as simple as just picking one. There are certain standards for who may qualify for which filing. As the U.S. Courts points out, if someone’s monthly income over five years is either 25 percent of the debts that are unsecured and non-priority, or if it is more than $12,475, then filing for Chapter 7 could be seen as an abuse of the system. That person would likely be directed toward filing for Chapter 13.
Qualifying under time limits
The U.S. Courts states that some people may not qualify for a bankruptcy filing based on a prior case dismissal within the past 180 days. This is true in cases in which the case was dismissed because the person did one of the following:
- Failed to comply with court orders
- Failed to appear in court
- Chose to dismiss the case due to creditors recovering property
When this occurs, the debtor will have to wait until the 180-day period has passed to initiate a bankruptcy petition.
Take required courses
Another requirement for either Chapter 7 or Chapter 13 is that in the 180 days leading up to the bankruptcy filing, the consumer must have taken a course in credit counseling from an agency that has been approved. These classes can help people determine if bankruptcy is necessary.
Following the filing, the person will also have to take a debtor education course. Failing to do this will mean that debts will not be discharged or reorganized. This class will help people rebuild life after bankruptcy, teaching items such as creating a budget and using credit wisely.
The best way to approach bankruptcy is to rely on professionals. People who have questions about this topic should speak with a bankruptcy attorney in Texas.