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Everyone that files for bankruptcy under Chapter 7 must take a “means test.” The means test is a formula-based screening tool to see if you qualify for Chapter 7 (debt liquidation) or Chapter 13 (repayment plan). You don’t have to be in poverty to file for Chapter 7.
When your debt becomes unmanageable, you may have legal options, like Chapter 7 bankruptcy, that can provide a fresh financial start. However, before you can file, you must qualify. Below, our Texas bankruptcy lawyers discuss the process of determining Chapter 7 eligibility, called the Texas bankruptcy means test.
If you’re interested in filing for Chapter 7 or Chapter 13, the bankruptcy attorneys at Leinart Law Firm are here to guide you through the process or help you seek an alternative debt relief solution if bankruptcy isn’t right for you.
Eligibility for Chapter 7 Bankruptcy in Texas. Under Texas law, not everyone is eligible for Chapter 7 bankruptcy in the state. To determine if you qualify, you must meet specific criteria, including: Median Income: First, you need to see if your income is above or below the median income for Texas residents.
You'll qualify for Chapter 7 bankruptcy if your family's gross income is lower than the median income for the same size family in your state. Add all gross income earned during the last six months and multiply it by two.
How to Qualify for Chapter 7 Bankruptcy Eligibility and Process. To qualify for Chapter 7 bankruptcy, individuals must pass a means test. This test evaluates the debtor’s income and expenses to determine if they genuinely need debt relief through Chapter 7.
To be certain you are eligible to file for Chapter 7 relief, you will need to meet certain income requirements: If your annual income is below the median income in Texas for a household of your size, you may automatically qualify to file for Chapter 7 bankruptcy.
If your income is equal to or below the state median income level in Texas, you are most likely entitled to file for Chapter 7 bankruptcy. If you’re in a higher income bracket, you may be required to undergo means testing to determine whether you are able to repay some of your unsecured debt.
Here, learn some essentials about Chapter 7 bankruptcy, including how it differs from Chapter 13, who can file, how much it costs, and how payments are calculated. Chapter 7 is a form of bankruptcy known as "liquidation," where a court-appointed trustee sells your assets to pay off creditors, but some property cannot be taken and sold.
Below are listed some of the unique requirements for filing for Chapter 7 bankruptcy in the state of Texas. Credit Counseling – Debt Education Courses. Before the courts will allow you to apply for Chapter 7, they require that all bankruptcy filers attend credit counseling courses at an agency that is court approved.