Do I Qualify to File Bankruptcy In Texas?

Technically, everyone qualifies to file bankruptcy. What people really want to know when they ask that question is 'can I successfully file for bankruptcy?'. First you need to figure out why you think you need to file in the first place. Are you overwhelmed by credit debt? Behind on a house or a car? Is the goal simply to wipe out overwhelming debt or to save that car or house from repossession or foreclosure? Once you have the answers to those questions you can then start the analysis of which bankruptcy makes sense for you and whether you can successfully complete it. The first step of that analysis is an examination of your income.

Which Bankruptcy Should I File

If the main goal is wiping out debt, you should see if you could successfully complete chapter 7 bankruptcy. The main goal of most chapter 7s is to get a discharge of many types of debts. A discharge is a court order that absolves you of liability on all sorts of debts, the most common of which are credit cards and medical bills (many other types of debts may also be discharged but that is outside the scope of this article).

To have a good chance of successfully completing a chapter 7, you must pass to tests related to your income. One is a formulaic, government test, called the 'means test' and the analysis starts with your prior 6 months of income. The other test is called the 'disposable income test'. This is based on what your real life is like in terms of your average monthly gross income and the deduction of reasonable and necessary expenses, keeping in mind that 'reasonable and necessary' is in the eyes of the court. To see if you pass those to tests and to determine if everything else makes sense for you to do a chapter 7, you should meet with an experienced bankruptcy attorney.

In the next article, we'll talk about the income analysis for a chapter 13 bankruptcy.