Break Free From Debt With An Experienced Chapter 7 Bankruptcy Attorney
Chapter 7 is known as liquidation bankruptcy and is typically what most people have in mind when filing for bankruptcy, but it is the far more difficult chapter of bankruptcy to qualify for. With Chapter 7, a person will have to submit to a bankruptcy means test, which is used to determine if a bankruptcy filing is considered abusive of the bankruptcy process.
Chapter 7 often means that debtors are at risk of losing some major assets that the bankruptcy trustee will have to sell to pay creditors, and a person who files for Chapter 7 will not be able to file for bankruptcy again for another eight years. The benefit of successfully filing for Chapter 7, however, is that debts are completely discharged and the person will no longer be liable for them.
“At The Sparrow Law Firm, PLLC, we recognize that each case is uniquely different.” Get personalized guidance from a skilled Chapter 7 bankruptcy lawyer.
Houston Chapter 7 Bankruptcy Attorney
Are you wondering if you might be able to file for Chapter 7 bankruptcy in Houston? You will want to be sure you contact The Sparrow Law Firm, PLLC, for help with the means test and all other requirements involved in filing for Chapter 7, as our bankruptcy law firm has the experience needed to help you get the most favorable results for your case.
Do not try to file for Chapter 7 on your own, as you will likely encounter a series of immense challenges that will only cause even more problems for you. You should instead call us at 281-942-1508 or contact our bankruptcy attorney online today to receive a free consultation that will allow us to examine every aspect of your case and whether you can qualify for Chapter 7.
Chapter 7 Eligibility
A bankruptcy court can dismiss a Chapter 7 bankruptcy case when an individual’s debts are primarily consumer-related rather than business-related. Such filings are considered abusive of the bankruptcy process, and the bankruptcy means test also determines whether a Chapter 7 filing is considered abusive.
Abuse will be presumed when a debtor’s aggregate current monthly income over five years is more than $12,850 or 25% of the debtor’s nonpriority unsecured debt when that amount is at least $7,700. Debtors may rebut presumptions of abuse, but failure to do so will often mean that their cases are converted to Chapter 13 or their cases will be dismissed.
There is no limit to the amount of debt that a person may have when filing Chapter 7, but there are circumstances that may prohibit a Chapter 7 filing. For example, a person cannot file for Chapter 7 if they had a prior bankruptcy petition dismissed because of their willful failure to appear before the court or comply with orders of the court within 180 days prior to the petition. A debtor who voluntarily dismissed a previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens will also be prohibited from filing.
Chapter 7 also will not be approved without the debtor receiving credit counseling within 180 days of their filing. Furthermore, Chapter 7 will require the completion of the bankruptcy means test, which typically examines all sources of a person’s income during the previous six months, particularly when a person’s income is more than the state median.
When monthly income and annual income are determined, they will have to be less than the state median for a person to successfully file for Chapter 7. As of 2020 in Texas, the median income standards are as follows:
| Household Size | Monthly Income | Annual Income |
| 1 | $4,241.83 | $50,902 |
| 2 | $5,574.92 | $66,899 |
| 3 | $6,162.33 | $73,948 |
| 4 | $7,188.25 | $86,259 |
| 5 | $7,938.25 | $95,259 |
| 6 | $8,688.25 | $104,259 |
| 7 | $9,438.25 | $113,259 |
| 8 | $10,188.25 | $122,259 |
| 9 | $10,938.25 | $131,259 |
| 10 | $11,688.25 | $140,259 |
As a liquidation bankruptcy, a debtor in Chapter 7 does not deal with any repayment of debts. The trustee assigned to the case, however, will collect and sell all of the debtor’s nonexempt assets to repay creditors in accordance with the Bankruptcy Code.
The main purpose of Chapter 7 bankruptcy is to give debtors a “fresh start,” and debtors will be free from any liability for their discharged debts. It is important to keep in mind that Chapter 7 cannot discharge all debts, as some debts may not be discharged in any bankruptcy proceeding.
The Chapter 7 Bankruptcy Process
Here is a breakdown of everything involved and what people need to file:
Gathering/Filing The Appropriate Documents
A person begins the Chapter 7 bankruptcy process by filing a petition in the bankruptcy court for the area in which they live. Debtors will also have to file:
- Schedules of assets and liabilities
- Schedules of current income and expenditures
- Statements of financial affairs
- Schedules of executory contracts and unexpired leases
Debtors are also required to provide the bankruptcy trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case. This will include tax returns for prior years that had not been filed when the case began.
There are additional document filing requirements for debtors with primarily consumer debts. These include:
- A certificate of credit counseling
- A copy of any debt repayment plan developed through credit counseling
- Evidence of any payment from employers received within 60 days before filing
- A statement of monthly net income and any anticipated increase in income or expenses after filing
- A record of any interest the debtor has in federal or state-qualified education or tuition accounts
If you have any questions about these documents, you can call us at 281-942-1508.
Filing The Appropriate Fees
Chapter 7 cases also involve filing fees, administrative fees and trustee surcharges. These may be paid in installments, but the court may also waive the fees when a debtor has an income that is less than 150% of the poverty level.
Submitting Creditor Claims
Information that will be required of a debtor filing for Chapter 7 will include a list of all creditors as well as:
- The amount and nature of their claims
- The source, amount and frequency of the debtor’s income
- A list of all of the debtor’s property
- A detailed list of the debtor’s monthly living expenses
Debtors will also need to file a schedule of their exempt property, and Texas is considered a very debtor-friendly state with the number of exemptions that it offers most debtors.
Implementing The Automatic Stay
Filing a Chapter 7 bankruptcy petition will trigger an automatic stay that immediately halts all creditor collection efforts. Within 21 to 40 days, the bankruptcy trustee will usually schedule a meeting of the creditors, which the debtor must attend.
Meeting With Creditors
At the meeting of the creditors, the debtor is placed under oath and must answer questions from both the trustee and the creditors. The meeting of the creditors is also used by the trustee to relay information about the effect of bankruptcy on their credit history and their ability to file under a different chapter.
Waiting For Discharges
Following the meeting of the creditors, it will typically take 60 days for a person to have their Chapter 7 case discharged. All told, it usually takes less than six months to file for Chapter 7 bankruptcy.
“Don’t be afraid of bankruptcy in Texas.”
– Ikaha M. Sparrow
Texas Chapter 7 Bankruptcy Resources
Chapter 7 – Bankruptcy Basics | United States Courts – Visit this United States Courts website page to learn more about Chapter 7 bankruptcy, including alternatives to Chapter 7 and background information on the history of Chapter 7. You can also find information about Chapter 7 eligibility, how Chapter 7 works and the role of the case trustee. There is also information about the Chapter 7 discharge, and you can find Chapter 7 fee waiver procedures and resources, which outline specific applicable sections of the United States Code.
Chapter 7 Bankruptcy – Fact Sheet | TexasLawHelp.org – Use this website to get answers to questions about Chapter 7 and the means test. There is also information about how Chapter 7 will affect your credit and a helpful guide to all of the different things that Chapter 7 can and cannot do for you. Finally, there is also information about alternatives to Chapter 7.
Chapter 7 Bankruptcy FAQs
We hear these ones often from our clients:
How do I qualify for Chapter 7 bankruptcy in Texas?
To qualify for Chapter 7, you typically have to pass the means test. The test measures your income against the median in the state. In Texas, the median household income is around $83,037, and the median income for individuals is $63,448, according to the Census Bureau. If your single or household income is below the median, you can typically qualify for Chapter 7.
How much does it cost to file Chapter 7?
The cost of filing for Chapter 7 can depend on a variety of circumstances. The total expense for filing usually comprises court filing fees and attorney fees.
What debts can and can’t I discharge in Chapter 7 bankruptcy?
The types of debts you can discharge in Chapter 7 include:
- Credit card debt
- Medical bills
- Past due utility bills
- Personal loans
- Payday loans
The types of debts you can’t discharge during Chapter 7 bankruptcy include:
- Student loans
- Taxes
- Child support
- Alimony/spousal support
- Debts incurred from a drunk driving accident
It’s essential to understand which debts you can and cannot discharge before filing for bankruptcy.
Which assets can I keep after filing for Chapter 7?
Certain assets are considered exempt from liquidation under Chapter 7; they include:
- Your home
- One vehicle per licensed driver
- Personal property (up to $50,000 for single individuals and $100,000 for families)
- Necessary health aids and medical devices
- Family heirlooms
- Retirement accounts
If you have any questions about any of these assets amid the Chapter 7 process, we are here to answer them.
Bankruptcy Doesn’t Have To Be Scary: Trust A Compassionate Houston Chapter 7 Bankruptcy Lawyer
If you have been thinking about possibly filing for Chapter 7 bankruptcy to deal with your financial woes, you are going to want to make sure that you have a legal expert on your side so you can have the most favorable chance of getting the discharge you so richly deserve. The Sparrow Law Firm, PLLC, helps clients all over the Houston area get their bankruptcy petitions approved in a timely and effective manner, and our bankruptcy attorney can help you get through the Chapter 7 process without any unnecessary stress for yourself.
Do not wait another moment to call us at 281-942-1508 or contact us online so you can take advantage of a free consultation that will let us review all of the facts of your case to determine if you are eligible for Chapter 7. Our Chapter 7 bankruptcy attorney will work tirelessly to help you get the debt relief you need, and we have the experience needed to ensure that you are able to get real results that will allow you to finally find financial freedom and take the next steps in your life.