Texas Bankruptcy Means Test
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Texas Bankruptcy Means Test
If you would like to file a Chapter 7 bankruptcy you must pass the Texas means test. The test only applies to higher income filers which means that if your income is below the Texas median for your household size you are exempt from the test and may file a Chapter 7.
If your income is higher than the Texas median you will need to complete the means test calculation to determine if you can pay back a portion of your unsecured debts through a Chapter 13 bankruptcy.
Means Test Exemptions
If your debts are not primarily consumer debts then you are exempt from the means test. You are also exempt from the means test if you are a disabled veteran and incurred your debts primarily while serving on active duty or performing a homeland defense activity.
Texas Median Income
If your current monthly household income is less than the Texas median income for a household of your size there is a presumption that you pass the means test and are eligible to file a Chapter 7 bankruptcy.
Your average household income is determined by averaging your monthly income over the last six calendar months. If you are over the median income limit and your income has declined over the last six months, then waiting one or more months might bring your income under the median level for Texas. Once you determine your average monthly income you multiply that by 12 to determine your annual income for the purpose of Texas median income test.
- Member Household – $41,354.00
- Member Household – $56,296.00
- Member Household – $59,567.00
- Member Household – $68,566.00
- Member Household – $76,666.00
- Member Household – $84,766.00
- Member Household – $92,866.00
- Member Household – $100,966.00
- Member Household – $109,066.00
- Member Household – $117,166.00
If your income is over the Texas median income for a household your size then you must complete the means test by calculating your income and expense information. You must collect some of the information needed to complete the calculation, such as your current monthly income, from your own personal records including pay stubs and bank records.
Income includes almost all of the sources of income you may have including, but not limited to, business income, rental income, interest and dividends, pensions and retirements plan payments, amounts paid by others for your household expenses, and unemployment income.
Much of the information related to your expenses is based on national, Texas, and local averages and standards and comes from the Census Bureau and the Internal Revenue Service. There are some expenses you are allowed to include such as obligations you are legally required to pay such as child support and expenses necessary for health and welfare. After you have collected all the required information, you will subtract all of your allowed expenses for Texas from your income to determine the amount of income under the bankruptcy law that you have available to pay your unsecured creditors in a Chapter 13 bankruptcy plan.
If your total monthly income over the course of the next 60 months is less than $7,475 then you pass the means test and you may file a Chapter 7 bankruptcy. If it is over $12,475 then you fail the means test and don’t have the option of filing Chapter 7 bankruptcy. If your disposable income under the means test is between $7,475 and $12,475 then you must do further calculations to determine if you have the option of filing a Chapter 7 case.
Keep in mind that just because you can file a Chapter 7 bankruptcy, does not mean that it is in your best interest. Generally, a Chapter 7 bankruptcy is a better option if you are not attempting to keep secured property like home with a mortgage, but you should consult with an experienced bankruptcy attorney to determine your options and the best course to take.
Why Choose The Ciment Law Firm, PLLC?
- Free Consultation – Find out which debt resolution option is best for you during a free consultation.
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- Options for All Needs – From bankruptcy protection to judgment lien releases and student loan assistance, our firm provides ample options to resolve your debts.
- Experience on Both Sides of the Field – Daniel Ciment started his career at a debt collection law firm and now protects those in debt. His experience on both sides allows him to find solutions for his clients.
- Compassionate and Transparent – Patient and knowledgeable, the team is available to answer all questions and explain the process so that clients can reach their desired outcome.
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Cloud Title On Homestead
You must have a clear title when refinancing or selling a home, which is why an abstract of judgment is problematic. The judgment lien creates a title defect or a cloud on the title. This means that there is an unresolved issue that must be addressed before making any real estate transactions. Title companies enforce the lien as a way to protect themselves in case the home isn’t eligible for homestead exemption because it’s not your primary residence. If a title company allows the transaction to proceed and the property isn’t your homestead, it has to pay the judgment. Fortunately, a Texas judgment lien release lawyer can remedy this issue.
Getting A Full Release
In some instances, you have to get a full judgment lien release. This completely releases the judgment, so it isn’t attached to you or your property. There are normally two options for obtaining a full release. First, you can pay the judgment in full. If you don’t have the means to do that, your Texas judgment lien release attorney might be able to negotiate a settlement. If the creditor accepts the settlement, you will receive a full release once it’s paid. Without taking action, the judgment will remain valid for 10 years. It’s important to contact a judgment lien release attorney to go over your options if you need a full release.
Proof Of Homestead
Judgment creditors often require proof of homestead before signing a partial lien release. Your Texas judgment lien release attorney will help you provide the necessary documents. You might need to submit an affidavit that states that the property is your homestead. The creditor also might require a tax certificate that proves you’ve filed for homestead exemption. In addition, the creditor might ask for affidavits from others that state that the property is your homestead, and you live there. In some cases, the creditor can even require the escrow agent to examine the property to ensure it’s your homestead. Due to the complexity of proving homestead, it’s a good idea to get help from a Texas judgment lien release attorney.