Bankruptcy FAQ’s
If you are researching bankruptcy in Texas, you probably have a lot of questions before you are ready to call anyone. This page covers the most common questions we hear from clients and prospects across the state. Don't see your question here? Schedule a free consultation with attorney Robin McCarty or Bria Larson, and we will answer it directly.
Getting Started
Will I Lose Everything If I File for Bankruptcy?
In most cases, no. Texas has some of the most generous bankruptcy exemptions in the country. Most people who file keep their home, car, retirement accounts, and personal property. Fear of losing everything is one of the most common reasons people delay filing, but that fear usually does not match how the law actually works. Read more on our Texas bankruptcy exemptions page, or see what property you can keep in Chapter 7.
Can I Afford to File for Bankruptcy?
For most people struggling with debt, filing costs far less than staying stuck with payments they cannot make. Chapter 7 attorney fees typically range from a few hundred to a couple thousand dollars, depending on how complex your case is. The court also charges a $338 filing fee, which can often be paid in installments. We offer free consultations and will give you a clear picture of the cost before you commit to anything. See our full breakdown of how much bankruptcy costs in Texas.
Do I Need an Attorney to File for Bankruptcy?
You are not required by law to hire an attorney. However, bankruptcy involves federal court filings, means test calculations, exemption planning, and deadlines that carry real consequences if you get them wrong. Many people who file without an attorney make errors that delay their case or cost them assets they could have protected. At Bankruptcy Texas, you talk to a real attorney from day one, not a salesperson or intake coordinator. Learn more about filing bankruptcy without a lawyer in Texas.
How Long Does the Bankruptcy Process Take?
Chapter 7 typically takes three to four months from filing to discharge. The automatic stay goes into effect the moment your case is filed, so creditor calls, most garnishments, and foreclosure activity stop right away.
Will Bankruptcy Stop Creditor Calls and Collection Letters?
Yes. The automatic stay is a federal court order that takes effect the instant your attorney files your bankruptcy petition. It prohibits creditors from calling you, sending collection letters, garnishing your wages, or pursuing a lawsuit. Child support and spousal maintenance collection are the main exceptions and can continue. Creditors who violate the automatic stay can face court sanctions. Read more about how bankruptcy stops debt collector calls.
Is Bankruptcy Public Record?
Technically, yes. Bankruptcy cases are filed in federal court and are part of the public record. In practice, the only people who typically find out are creditors notified as part of the process, the credit bureaus, and anyone who actively searches federal court records. Your neighbors, coworkers, and family members are very unlikely to find out unless you tell them. If the worry is what people will think, read is filing bankruptcy something to be ashamed of?
Chapter 7
What Is the Chapter 7 Means Test?
The means test is a calculation that determines whether your income is low enough to qualify for Chapter 7. It compares your average monthly income over the past six months to the Texas median income for your household size. Fall below the median and you pass. Above it, a second calculation looks at your allowable expenses to see if you still qualify, and many people pass at that step. Read more: Do I Qualify for Chapter 7 in Texas?
What Debts Does Chapter 7 Eliminate?
Chapter 7 discharges most unsecured debts, including credit card balances, medical bills, personal loans, utility arrears, and certain older tax debts. It does not eliminate child support, spousal maintenance or alimony, most student loans, recent tax debts, or debts from fraud. Learn more on our Chapter 7 page.
Can I Keep My Car in Chapter 7?
In most cases, yes. Texas lets each licensed driver in the household exempt one vehicle, with no dollar cap per car. Vehicle equity counts toward the overall personal property limit of $50,000 for a single filer or $100,000 for a family. If you have a car loan, you have three options: reaffirm the debt and keep paying, surrender the vehicle and discharge the balance, or redeem it by paying its current market value in a lump sum. Most people who stay current on payments can keep their car. Learn more about what happens to your car in bankruptcy.
Can I Keep My House in Chapter 7?
Texas has an unlimited homestead exemption, which means your primary residence is protected regardless of its value, as long as it meets the acreage limits. One exception: if you bought the home within about 40 months before filing, a federal cap can limit how much equity is protected. Stay current on your mortgage when you file, and you can usually keep the house and keep paying. Falling behind makes the picture more complicated: the exemption protects your equity, but your mortgage lender can still enforce its lien. See how bankruptcy affects a pending foreclosure. Our attorneys can review your situation during a free consultation and explain your options for protecting your home.
How Long Does Chapter 7 Stay on My Credit Report?
A Chapter 7 bankruptcy stays on your credit report for ten years from the filing date. That sounds long, but most people start rebuilding credit within one to two years of discharge. Many of our clients are surprised by how quickly their scores recover once unmanageable debt is gone.
Exemptions & Property
What Is the Texas Homestead Exemption?
The Texas homestead exemption protects your primary residence from creditors with no dollar limit. Whether your home is worth $200,000 or $2 million, it is protected as long as it meets the acreage requirements: up to ten acres in an urban area, or up to 100 acres for a single person and 200 acres for a family in a rural area. One exception applies if you bought the home within about 40 months before filing, when a federal cap can limit how much equity is protected. This is one of the most powerful exemptions in the country.
Are My Retirement Accounts Protected in Bankruptcy?
Yes. Most retirement accounts, including 401(k) plans, 403(b) plans, and IRAs, are protected in bankruptcy under both federal law and Texas state law. IRAs carry a federal cap of over $1 million, which very few filers ever reach. You do not need to cash out or surrender your retirement savings to file. Learn more about what happens to your retirement in bankruptcy.
What Happens to My Social Security Income in Bankruptcy?
Social Security income is excluded from the Chapter 7 means test calculation, which means it does not count against you when determining whether you qualify. Social Security funds in a bank account are also protected. Keeping them in a separate account, apart from other income, makes that protection much easier to prove. Both SSI and SSDI receive this protection. Read more about whether Social Security can be garnished in Texas.
Can Creditors Take My Personal Property?
Texas exempts up to $50,000 in personal property for a single person and $100,000 for a family. This covers furniture, clothing, tools of your trade, sports equipment, and a wide range of household items. In practice, most people's personal property falls well within these limits. See what property you can keep in Chapter 7.
The Filing Process
What Is the 341 Meeting?
The 341 meeting, also called the meeting of creditors, is a short hearing required in every bankruptcy case. It is held by the bankruptcy trustee assigned to your case, not a judge. You will answer questions about your finances and the information in your petition. The meeting typically lasts ten to fifteen minutes, and many are now held by video or phone. Creditors have the right to attend but almost never do in consumer cases. Your attorney attends with you.
What Is a Bankruptcy Trustee?
The trustee is a court-appointed official whose job is to review your case, verify your paperwork, and sell any non-exempt assets to pay creditors. This person is not your attorney and does not represent you. Instead, the trustee works on behalf of your creditors.
What Is Credit Counseling and Do I Have to Do It?
Yes. Federal law requires you to complete a credit counseling course from an approved provider within 180 days before filing. After your case is filed, you must also complete a debtor education course before your discharge is granted. Both courses are available online, take about an hour each, and cost very little. Your attorney will give you the approved provider list.
How Soon After Filing Does the Automatic Stay Go Into Effect?
Immediately. The automatic stay takes effect the moment your bankruptcy petition is filed with the court. It does not wait for a hearing or for a judge to review your case. If a creditor contacts you after your case is filed, notify your attorney right away. Creditors who knowingly violate the stay can be ordered to pay damages, including your attorney fees. One exception: a prior bankruptcy case dismissed within the past year can limit the stay, so tell your attorney about any earlier filings.
Can I Choose Which Debts to Include in My Bankruptcy?
No. Federal law requires you to list all of your debts in your bankruptcy petition. You cannot pick and choose which creditors to include. However, you can choose to reaffirm certain debts, like a car loan, which means you voluntarily agree to remain personally liable for that debt and keep making payments in exchange for keeping the collateral. You can also voluntarily repay any debt after discharge, such as a loan from a family member.
Life After Bankruptcy
How Soon Can I Get a Credit Card After Bankruptcy?
Many people qualify for a secured credit card within weeks of receiving their discharge. A secured card requires a deposit that becomes your credit limit and reports to the credit bureaus just like a regular card. Used responsibly, it is one of the fastest ways to start rebuilding. Some of our clients receive unsecured card offers within one to two years of discharge.
How Soon Can I Buy a House After Bankruptcy?
It depends on the loan type. FHA loans typically require a two-year waiting period after a Chapter 7 discharge. Conventional loans generally require four years after Chapter 7. VA loans follow similar timelines to FHA. The waiting period starts from your discharge date, not your filing date. Learn more about getting a mortgage after bankruptcy in Texas.
Will Bankruptcy Affect My Job?
Federal law prohibits government employers from firing or refusing to hire someone solely because they filed for bankruptcy. Private employers also cannot fire you just because you filed, though the law is less clear for hiring decisions. In practice, most employers do not check bankruptcy records as part of standard background checks. Positions that require security clearances or involve handling large sums of money may involve additional scrutiny.
How Do I Rebuild My Credit After Bankruptcy?
The fastest path is a secured credit card used responsibly, with small purchases paid in full every month. Adding a credit-builder loan from a credit union is a second step many people take in the first year. On-time payment history is the single biggest factor in credit score recovery. Most of our clients see meaningful score improvement within twelve to twenty-four months of discharge. Read more: How Long Does Bankruptcy Stay on Your Credit Report?
Can I File for Bankruptcy Again If I Need To?
Yes, but federal law sets waiting periods between filings. After a Chapter 7 discharge, you must wait eight years from your earlier filing date before you can receive another Chapter 7 discharge. A different waiting period applies if your previous case was filed under a different chapter of the bankruptcy code. Your attorney will confirm which timeline fits your situation during your free consultation. Learn more about filing bankruptcy twice in Texas.
Still Have Questions?
Every bankruptcy case is different. The best way to get answers that apply to your specific situation is to speak with attorney Robin McCarty or Bria Larson directly. At Bankruptcy Texas, you talk to a real attorney from day one, not a salesperson or intake coordinator. We offer free consultations at our offices in Arlington, Midlothian, Lubbock, and Cleburne. We will answer your questions, review your situation, and give you a clear picture of your options with no pressure and no obligation. Contact us to schedule your free consultation.
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Let’s Talk About a Fresh Start
If you’re facing overwhelming debt, the team at Bankruptcy Texas is here to help you file for bankruptcy with confidence and dignity. From start to finish, we provide the legal guidance and resources you need to move forward. We offer a free consultation to review your situation, explain your legal options, and answer your questions. If you are ready to take the next step toward financial recovery, we are ready to help.
We serve clients across Texas from our offices in Arlington, Midlothian, Lubbock, and Cleburne, as well as surrounding cities including Dallas, Fort Worth, and Grand Prairie.
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