Filing for bankruptcy in Texas sets off a federal court order that stops creditors from collecting, puts your property under some of the most protective exemption laws in the country, and ends in either a discharge that wipes out qualifying debts or a court-supervised repayment plan lasting three to five years. The case runs in federal bankruptcy court, but Texas state law decides what you keep. Which chapter you file under, Chapter 7 or Chapter 13, shapes almost everything that follows.
What Happens the Moment You File
The instant your petition hits the court’s docket, a federal order called the automatic stay takes effect. Creditors have to stop calling, stop sending letters, stop lawsuits, stop wage garnishments, pause foreclosures, and halt vehicle repossessions.1Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay A creditor who ignores the stay can be sanctioned.
In a Chapter 7 case, that protection usually runs the three or four months the case is open. In a Chapter 13, the stay stays in place for the full repayment period, which is one reason people trying to save a home from foreclosure often choose Chapter 13.
The stay has real gaps. Criminal cases keep moving. So do family law matters like custody, paternity, and divorce, though dividing property that belongs to the bankruptcy estate can be paused. Collection of child support and alimony from property that isn’t part of the estate continues too.1Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay Government agencies can still run tax audits, issue deficiency notices, and enforce regulatory actions.
Repeat filers get less protection. If you had a case dismissed in the previous year, the stay only lasts 30 days unless you ask the court to extend it. If two or more cases were dismissed in the previous year, no stay takes effect at all without a specific court order.1Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
Chapter 7 or Chapter 13
Most individual filings in Texas go under one of these two chapters, and the choice drives almost every other decision.
Chapter 7
Chapter 7 is the faster path. A court-appointed trustee reviews what you own, sells anything not covered by an exemption, and distributes the money to creditors. Because Texas exemptions reach so much property, a lot of Chapter 7 cases end up as “no-asset” cases where the trustee has nothing to sell and qualifying debts are wiped out. From filing to discharge usually runs three to four months.2United States Courts. Chapter 7 – Bankruptcy Basics
Not everyone qualifies. If your household income is above the Texas median for your family size, you have to pass a means test that weighs your income against allowed expenses and unsecured debts. If the numbers suggest you could repay a meaningful share of what you owe, the court can presume a Chapter 7 filing is abusive and push you into Chapter 13.3Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion
Chapter 13
Chapter 13 keeps your property but requires a repayment plan. If your income is below the state median, the plan runs three years. Above the median, generally five.4United States Courts. Chapter 13 – Bankruptcy Basics You pay a trustee monthly, the trustee pays your creditors, and whatever qualifying debt remains at the end gets discharged.
Chapter 13 has debt ceilings. Noncontingent, liquidated unsecured debts have to be under $526,700, and secured debts under $1,580,125.5Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor People pick Chapter 13 to catch up on missed mortgage payments and keep the house, or because their income disqualifies them from Chapter 7.
What Property You Keep
Texas is one of the most debtor-friendly states in the country on exemptions. To use them, you have to have lived in Texas for the 730 days (roughly two years) before filing. Move here more recently and the exemptions from your prior state may apply instead.6Office of the Law Revision Counsel. 11 USC 522 – Exemptions
Your Home
Texas puts no dollar cap on the equity you can protect in your primary residence. A $150,000 house and a $1.5 million house are both fully shielded, as long as the land fits the acreage limits.7State of Texas. Texas Property Code 41-001 – Interests in Land Exempt from Seizure An urban homestead can be up to 10 acres. A rural homestead can be up to 200 acres for a family or 100 acres for a single adult.8State of Texas. Texas Property Code 41-002 – Definition of Homestead
Federal law carves out one big exception. If you bought your homestead within the 1,215 days (about three years and four months) before filing, the exemption is capped at $214,000 in equity, no matter what Texas law says.6Office of the Law Revision Counsel. 11 USC 522 – Exemptions The cap doesn’t apply if you rolled equity from a previous Texas homestead into the current one, or if you’re a family farmer protecting a principal residence. For everyone else, buying a house right before filing won’t shelter unlimited equity.
Personal Property
Texas protects a wide range of personal property up to an aggregate value: $100,000 for a family, $50,000 for a single adult. Protected categories include home furnishings, clothing, tools and equipment used in your work, athletic and sporting equipment, two firearms, and a motor vehicle for each licensed driver in the household.9State of Texas. Texas Property Code 42 – Personal Property Jewelry is covered, but only up to 25 percent of your total personal property limit.
Retirement Accounts
Retirement savings are broadly protected. Texas exempts employer-sponsored plans like 401(k)s, pensions, and profit-sharing accounts, along with IRAs, Roth IRAs, SEP plans, and health savings accounts.10State of Texas. Texas Property Code 42-0021 – Additional Exemption for Certain Savings Plans Federal law also keeps retirement funds in tax-qualified accounts out of the bankruptcy estate.6Office of the Law Revision Counsel. 11 USC 522 – Exemptions
One ceiling to know: traditional IRAs and Roth IRAs, not counting rollovers from employer plans, are capped at $1,711,975 in aggregate exempt value under federal law.6Office of the Law Revision Counsel. 11 USC 522 – Exemptions Most filers never bump against it. Employer-sponsored plans like 401(k)s have no cap.
The Steps You Have To Complete
Several mandatory steps can stall or kill a case if you miss them.
Credit Counseling Before You File
You have to complete a credit counseling session with a government-approved nonprofit agency within the 180 days before you file.11Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor The session reviews your finances and looks at alternatives. You get a certificate that must be filed with your petition, and skipping it can get your case dismissed.12United States Department of Justice. Credit Counseling and Debtor Education Information
The Petition and Schedules
Your filing is a petition plus detailed financial schedules. You list every asset you own, every creditor, your income, and your monthly expenses.13Legal Information Institute. Federal Rule of Bankruptcy Procedure 1007 – Lists, Schedules, Statements, and Other Documents Real property is separated from personal property, and creditors are broken into secured, unsecured priority, and unsecured nonpriority categories. Leaving out an asset or a creditor can derail your discharge or expose you to fraud allegations.
The Meeting of Creditors
Between 21 and 40 days after you file, you’ll attend a hearing called the 341 meeting of creditors. In consumer cases, creditors rarely show up.2United States Courts. Chapter 7 – Bankruptcy Basics No judge is present. The trustee runs it, and the whole thing often takes less than ten minutes.14United States Department of Justice. Section 341 Meeting of Creditors
The trustee puts you under oath and asks about your petition, your assets, your debts, your income, and your expenses. The goal is accuracy and completeness. If a bank account is missing or an asset transfer looks unexplained, the trustee digs in, and the consequences can be serious.15Office of the Law Revision Counsel. 11 USC 341 – Meetings of Creditors and Equity Security Holders
Debtor Education After You File
After filing, you have to finish a separate financial management course on budgeting and money skills. You won’t get a discharge until it’s done.16United States Courts. Credit Counseling and Debtor Education Courses
What Debts Get Wiped Out
The discharge is the point of the whole process. It’s a court order that permanently ends your personal obligation to pay qualifying debts and bars creditors from ever trying to collect them again.17Office of the Law Revision Counsel. 11 USC 524 – Effect of Discharge In Chapter 7, the discharge usually arrives 60 to 90 days after the meeting of creditors. In Chapter 13, it comes at the end of the repayment plan.
Most unsecured debt is dischargeable: credit card balances, medical bills, personal loans, old utility bills. Several categories survive bankruptcy for public policy reasons:18Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
- Child support and alimony survive every case.
- Student loans survive unless you prove repayment would impose an “undue hardship,” a standard courts have historically read strictly.
- Most recent income tax debts survive, though older tax debts can sometimes be eliminated if they meet strict timing conditions.
- Debts from fraud or intentional harm survive, including credit card charges run up with no intention to repay.
- Criminal fines and restitution survive.
What It Does To Your Credit
A Chapter 7 filing stays on your credit report for 10 years from the filing date. A Chapter 13 drops off after seven years. Both come off automatically.
The hit is real but not permanent. Many filers see scores start climbing within a year or two after discharge, especially with small amounts of new credit managed well. The bigger practical issue is borrowing for big purchases. Conventional mortgage lenders generally want to see two to four years after a Chapter 7 discharge. For FHA loans, the wait is generally two years after Chapter 7 or one year into an active Chapter 13 plan with court approval. Specifics vary by loan type and lender.
Tell The Truth Or Lose Everything
Every petition is signed under penalty of perjury. Hiding property from the trustee, lying on your petition, or concealing financial records is a federal crime carrying up to five years in prison, fines, or both.19Office of the Law Revision Counsel. 18 USC 152 – Concealment of Assets; False Oaths and Claims; Bribery
Even without criminal charges, the bankruptcy court can deny your discharge outright or dismiss your case with prejudice, barring you from refiling for a period the judge sets. Trustees are experienced at spotting omissions, and full disclosure of every asset, account, and transaction is the only safe approach.