Texas Bankruptcy Law Information For State Residents

Consumer bankruptcies continue to rise every year and last year was no exception in this difficult economy. State residents have high debt loads. Should these become unsustainable, they may want to learn more about Texas bankruptcy law.

The liquidation Chapter 7 and reorganization Chapter 13 filings have been increasing, despite the 2005 federal law restrictions intended to reduce recourse to this remedy. In Texas, bankruptcy law complies with federal laws and statutes, which establish a national standard. However, there are additional state specific details to be aware of.

However, qualification is not always possible. Applications can be denied for various reasons. An unexceptional reason is income that exceeds the median income prerequisite for qualification under Chapter 7. The ongoing decline in median income in this recession means that this condition is becoming harder to meet. If even after including the deductions allowed, this condition is not reached, filing for a Chapter 13 bankruptcy could be the remaining choice. But, even this chapter has qualification requirements that must be met.

Amongst reasons for failure, procedural mistakes may also be the cause. Failure to get credit counseling before beginning this remedy is a reason for denial. Failing to list any property can be a reason as well. The process cannot be started without paying the required processing fee. Other possible mistakes include excessive spending before a filing.

Liquidation may be sought by businesses and individuals alike. With this remedy, the proceeds of liquidated property are fairly distributed amongst creditors. The property that can be included in the process is not subject to a federal or state exemption. Unsecured debts not reaffirmed may also be discharged in the process. It should be kept in mind that some debts are not subject to removal in this manner.

State exemptions permit some of the following items to be exempted from liquidation. Your home and its furnishings, business partnership property, a certain fair market value worth of personal property for individuals and family may be kept aside. Farmers and ranchers may keep certain possessions. These possessions include certain vehicles and implements. Personal possessions that may be retained include sporting equipment and tools of your trade. Burial plots and Health Aids are also exempt. Government provided compensation and benefits including Social Security are exempted. Child support and alimony, retirement plans and life insurance proceeds are excluded.

If you are an individual or a sole proprietor, through the reorganization process you can pay off all or part of your debts over a five year period. Instead of wiping out debts through liquidation, reorganization permits some space for payment of outstanding obligations. A stable income with a portion that is disposable is a prerequisite for this remedy. There is also a restriction on the amount of debt that can be outstanding. Debt must not exceed 1,010,650 dollars in secured debt and 336,900 dollars in unsecured debt.

Under the reorganization procedure, debtors may keep their property. Codebtors on any personal debts will not be affected, as long as the primary debtor keeps up with the payment plan. But, under the liquidation alternative, they remain liable. Texas bankruptcy law advice helps you to understand what is involved.

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