Written by Attorney Eva Bacevice.
Updated August 17, 2020
When you are hoping to file a Chapter 7 bankruptcy in Texas, you will need to show that you qualify before you even submit your paperwork. You do so by completing the Chapter 7 Means Test in Texas. The Means Test is a newer part of the bankruptcy process which was created by Congress back in 2005. At the time there was a concern from Congress that some people who were filing Chapter 7 bankruptcy were actually able to afford to pay some or all of their debts and were abusing the bankruptcy system by filing Chapter 7. Their solution was to create the Chapter 7 Means Test to ensure that people filing for Chapter 7 truly need to. You are able to pass the Means Test in one of two ways. First, you can do so through income limits - if your current monthly income is lower than the Texas median income for your family size, then you are immediately qualified. If you do not immediately qualify, you can then go through a full Means Test calculation, where you can show more specifics about both your current monthly income and your monthly expenses. If that full calculation shows that you have very little or no disposable income at the end of the month to pay to your creditors, you will qualify to file your Texas bankruptcy as a Chapter 7 case.
Texas Median Income Levels
Texas Median Income Standards for Means Test for Cases Filed On or After May 1, 2021
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Discharge in Bankruptcy for Texas
The outcome you are aiming for in a Chapter 7 bankruptcy is to receive your discharge order. The discharge is the point when you are able to officially walk away from all (or most) of your debts and enjoy your fresh start. Remember, that there are some types of debts that are non-dischargeable (like child support), which do survive the bankruptcy process, but your unsecured debt, like credit cards and medical bills, will be eliminated. The discharge in your Texas bankruptcy will usually come about 60 days after your Meeting of Creditors with your bankruptcy trustee. If you have filed all of your paperwork, completed all the necessary tasks, like credit counseling, and the trustee held and concluded your Meeting of Creditors, then you should only have to wait out the remaining time to get your discharge. Upsolve can help you through your bankruptcy step by step to help ensure you are on the path to receiving your Texas bankruptcy discharge.
Texas Means Test Calculator
If you do not immediately qualify for a Chapter 7 bankruptcy in Texas because you make too much money, you have another opportunity to qualify by going through the full Means Test. You will need to make sure that you are using an up to date Texas Means Test calculator to give you the best opportunity to qualify. While you will find many different Means Test calculators online it is hard to know which, if any, are fully up to date. Upsolve’s Means Test calculator is current to the day for Texas and all other states, so you can rest assured that you are using the most current information. This is very important as your ability to qualify for a Chapter 7 may hinge on a small difference in the numbers. Additionally, Upsolve can partner with you through all other aspects of your Chapter 7 so you can be certain that you are completing all the necessary forms and steps to receive a discharge in your Texas bankruptcy.
What Happens If I Fail The Means Test for Texas
If you fail to qualify for a Chapter 7 bankruptcy in Texas, either by income limits or through the full Means Test calculation there are still a few steps that you can take to explore your options. First, it is a good idea to go through your full Means Test calculation to verify that you included every possible expense. It can be easy to miss including something if it’s not a regular monthly expense but something that you only buy once or twice a year, like school supplies for the kids. Just make sure to average your total costs over the full year (12 months) to include the expense as monthly. You should also think about the future - are there any big changes on the horizon? Perhaps you are thinking about a separation or divorce which might result in separate households that might each pass the bankruptcy means test in Texas even though you do not qualify together. Or maybe your work is tied to the rodeo circuit and not consistent for the whole year. With any seasonal work, it is important to think about when you are trying to qualify. If you just did most of your work for the year, then your monthly income (based on the last 6 months) will look a lot different than it will a few months after the season ends. If any of the above applies to you, it can make sense to wait and see if you can pass the Chapter 7 Means Test in Texas at a later time. If that works out, then Upsolve can help you through the rest of your case with the Texas Bankruptcy Guide. If none of the above scenarios work out for you, it is probably a good time to have a consultation with a bankruptcy lawyer who handles Chapter 13 cases to see if you missed anything, or might benefit from a Texas bankruptcy under another Chapter.