TEXAS BANKRUPTCY LAW

WHAT IS THE TEXAS LAW REQUIREMENTS ON FILING BANKRUPTCY?

Texas Bankruptcy Process
http://www.texasbankruptcylaw.com/process.html

Bankruptcy in the United States
http://en.wikipedia.org/wiki/Bankrup..._United_States


2005 Bankruptcy Act Credit Counseling
The 2005 Bankruptcy Act requires all individual debtors who file
bankruptcy on or after October 17, 2005, to undergo credit counseling
within six months before filing for bankruptcy relief and to complete
a financial management instructional course after filing bankruptcy.

2005 Bankruptcy Act Means Test
Under the 2005 Bankruptcy Act you income and expenses will be analyzed
to determine if you qualify to file a Chapter 7 or if you must file
Chapter 13. To apply the means test, the courts will look at the your
average income for the 6 months prior to filing and compare it to the
median income for that state. If the income is below the median, then
you may choose Chapter 7. If your income exceeds the median, the
remaining parts of the means test will be applied to determine if you
can file Chapter 7 or if you must file Chapter 13.

Your will likely still be able to file a Chapter 7 bankruptcy if you
are unable to pay at least $6,000 over the next five years ($100 per
month) to your unsecured creditors after your expenses. However, if
you can pay at least $10,000 over five years ($166.67 per month or
more) your Chapter 7 will likely be denied.

If you could afford more than $6,000 but less than $10,000 over five
years, then a mathematical calculation determines whether your Chapter
7 will likely be successful or not. If you could afford to pay 25% or
more of your unsecured debt, then a Chapter 7 will likely be denied.
If you can't afford to pay 25% of your unsecured debt, your Chapter 7
filing will likely be successful. Examples of unsecured debts would
include medical and credit card bills. Note that you can still opt for
Chapter 13 even if you qualify to file under Chapter 7.

Gathering Paperwork
To begin the bankruptcy process you must itemize your current income
sources; major financial transactions for the last two years; monthly
living expenses; debts (secured and unsecured); and property (all
assets and possessions, not just real estate). You should also collect
your tax returns for the last two years, deeds to any real estate you
own, your car(s) titles, and the documents for any loans you may have.

Filing Bankruptcy
Once you have gathered this information, either on your own or with
the help of an attorney, you should then determine which property you
believe is exempt from seizure based on the Texas exemptions. To
actually file, either you or your attorney, will need to file a
two-page petition and several other forms at your Texas district
bankruptcy court. These forms, collectively are referred to as the
schedules and ask you to describe your current financial status and
recent financial transactions (typically within the last two years).
If your creditors or the judge feel or find out that you have not been
entirely forthcoming in your bankruptcy filing, it could jeopardize
the outcome of your petition.

The cost for filing a Chapter 7 bankruptcy is $274. This fee may not
be waived but you may be able to pay it in installments. The fee of
$189 for a Chapter 13 bankruptcy can not be waived.

Chapter 13 Requirements
If you are filing a Chapter 13 bankruptcy, a proposed repayment plan
must also be submitted. After reasonable monthly expenses have been
paid, how much money will you have left over to put toward your
outstanding bills? And how will this money be divvied up among those
you owe? Priority claims (such as taxes and back child support) must
be paid in full; unsecured debts (like credit card debt and medical
bills) are usually paid in part. Depending upon the judgments of those
involved with your case, unsecured debts can be paid off for as little
as 10 cents on the dollar.

In addition to the general requirements listed above, the repayment
plan must pass three tests:
1) It must be delivered in good faith.
2) Unsecured creditors must be paid at least as much as if a Chapter 7
bankruptcy had been filed. Generally, this is the value of all the
nonexempt property you own (see Texas bankruptcy exemptions).
3) All disposable income must be paid into the plan for at least three
years (you may use up to five years in order to meet the second test
that you pay at least as much as in a Chapter 7).

If you have filed Chapter 13, you must begin making your plan
payments. Generally these payments will be withdrawn directly from
your wages and you or your attorney should arrange with the court for
these payments to be deducted from your wages.

Automatic Stay
Once you have filed your paperwork with the bankruptcy court, an
automatic stay immediately goes into effect. This provision prevents
creditors from making direct contact with you or staking a claim on
any of your property from the day of filing forward. This will stop
any foreclosure proceedings. If you have filed Chapter 13, you must
begin making your plan payments. Generally these payments will be
withdrawn directly from your wages and you or your attorney should
arrange for these payments to be deducted from your wages.

Bankruptcy Trustee
Upon filing, the court will assume legal control of your debts and
property not covered by your Texas exemptions. A trustee will be
appointed to your case by the court. The job of the trustee is to see
that your creditors are paid as much as possible. This person will
thoroughly review your paperwork, particularly the assets you have in
your possession and the exemptions you wish to claim, and can
challenge any element of your case.

341 Meeting of Creditors
Approximately a month after filing, the trustee will call a first
meeting of creditors, which the debtor must attend. This proceeding is
also referred to as the section 341 meeting, named after the corresponding
section of the bankruptcy code. Creditors rarely attend a Chapter 7
bankruptcy meeting; one or two creditors may attend a Chapter 13
meeting, especially if there is a question as to the legitimacy of
some aspect of the plan. Objections are typically resolved by
negotiation between the debtor or the debtor's counsel and the
creditor. If a compromise can not be reached, a judge will intervene.

The meeting of creditors typically lasts about five minutes. You will
receive notice of the location of the meeting but you may contact the
court to confirm the address and time. (see Texas Bankruptcy Court
Directory) Most Chapter 7 filings involve no non-exempt assets,
however, if you filed for Chapter 7 and do have non-exempt assets, you
will have to turn over non-exempt property (or its fair market value
in cash) to the trustee after the meeting. The trustee will sell this
property and distribute the proceeds to your creditors. If the
property isn't worth a great deal or would be hard to sell, the
trustee may decide to abandon the property (and return it to you).
Trustees and creditors have 60 days to challenge the debtor's right to
a discharge. If there are no challenges, you will receive a notice
from the court that your dischargeable debts have been discharged
within roughly three to six months.

Chapter 13 Plan Confirmation
If you filed a Chapter 13 plan will need to attend a hearing before a
bankruptcy judge who will either confirm or deny the repayment plan.
If your plan is confirmed and you make good on it, the balance (if
any) on the dischargeable debts you owe will be eliminated at the end
of your term.