What Happens When You File for Bankruptcy in Texas?

Bills pile up, the phone will not stop ringing, and you are losing sleep wondering how to stretch every dollar. If that sounds familiar, take a breath.

At Bankruptcy Texas, we focus only on bankruptcy law, guiding neighbors across the state toward fresh starts and steadier futures. Today, we are sharing a plain-language look at what happens when you file in Texas, so you can decide if this step feels right for you.

What Bankruptcy Can Do For You

Bankruptcy is a federal tool that blocks most collection pressure the moment your case is filed. The protection, called the automatic stay, gives you room to catch your breath while the court sorts things out.

• Erase the legal duty to repay many unsecured debts through a discharge.
• Pause foreclosure or repossession and give you a chance to save the property.
• Stop wage garnishment, lawsuits, and those endless calls.
• Keep lights and water on by stopping utility shutoffs.
• Challenge inflated or fraudulent creditor claims in a single forum.

For many families, these immediate benefits bring relief long before the case closes.

What Bankruptcy Doesn’t Do

Even the most potent remedy has limits. Bankruptcy will not wipe away every kind of obligation, and it will not break a valid lien without payment.

Secured creditors keep their rights to the collateral if you stop paying. Support duties, recent taxes, criminal fines, and most student loans survive the process. A co-signer stays on the hook unless that person files too, and any balance you run up after filing remains your problem.

Types of Bankruptcy to Consider

Four chapters of the Bankruptcy Code are used most often:

Chapter 7 is a liquidation that trades non-exempt property for a quick discharge. Chapter 13 creates a three-to-five-year repayment plan for individuals who need time to catch up. Chapter 11 is a reorganization usually aimed at businesses, though high-debt individuals sometimes use it. Chapter 12 is reserved for family farmers and fishers. Most Texans choose either Chapter 7 or Chapter 13, so we will focus on those.

Chapter 7 Bankruptcy: Straight Bankruptcy

Think of Chapter 7 as a fast track. You list everything you own and everything you owe. Non-exempt assets, if any, are sold by a trustee, and the proceeds go to creditors. The good news is that Texas exemptions are generous, meaning many filers give up little or nothing. Chapter 7 makes sense when you are behind on unsecured bills and do not need long-term payment plans on a house or car.

Chapter 13 Bankruptcy: Reorganization

Chapter 13 works more like a court-supervised budget. A proposed plan is calculated pursuant to the Bankruptcy Code that pays what you can afford toward debts over three to five years. In return, you keep important property, such as a home or vehicle, while catching up on missed payments. To qualify, your income must cover normal living costs plus the monthly plan amount.

Texas Bankruptcy Exemptions: What Property Can You Keep?

State law lets you protect a sizable homestead and a broad range of personal items. The value is based on today’s market price, not what you paid years ago. A mortgage or car lien still exists, so staying current is vital if you wish to keep the property. In Chapter 13, you can retain assets even above exemption limits by paying the non-exempt value through the plan.

Will You Lose Your Home or Car?

If exemptions fully cover your equity, neither the trustee nor creditors can force a sale. Even with excess equity, Chapter 13 often allows you to pay that amount over time instead of surrendering the asset. Remember, the lien itself survives; miss future payments and the lender may still foreclose or repossess.

Debts That Cannot Be Wiped Out

Some obligations follow you even after bankruptcy. Common examples include:

• Child support and spousal maintenance.
• Court fines, restitution, and most recent income taxes.
• Debts for personal injury caused by drunk driving or willful harm.
• Most student loans, unless a separate hardship case succeeds.
• Liens on property unless the debt is paid or the creditor agrees to release them.

These balances must be paid directly or through a plan when required.

Meeting of Creditors

Roughly a month after filing, you attend a short session called the 341 meeting. A trustee confirms your identity and asks a few questions about the paperwork. Creditors may appear, but seldom do. A separate court hearing happens only if someone objects or a legal issue needs a judge’s attention.

Credit Impact After Bankruptcy

Your credit report already reflects late payments and collection activity, so the score may be low before filing. Bankruptcy can stay on the report for up to ten years, but many filers see improvement sooner because old balances are cleared and the debt-to-income ratio improves. New credit offers often arrive within a year, though interest rates may be higher at first.

Filing Bankruptcy: Stopping Collection Efforts

The automatic stay starts the instant your case reaches the court’s electronic docket. From that moment, collectors must cease all actions, including calls, letters, lawsuits, garnishments, and scheduled foreclosures. Violations carry penalties, so most creditors comply quickly once they receive notice.

Take the First Step Towards Financial Stability

If money worries keep you up at night, let us talk through real solutions without judgment. Call our team at 817-338-1100 or reach us through our Contact Us page and get clear answers about Chapter 7, Chapter 13, or other options. We focus on Texas residents every single day, and we are ready to put that focus to work for you. A brief conversation can set you on a path to calmer days and a healthier financial life.