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Bankruptcy is a way for people and businesses to get rid of or change their debts when they cannot pay them off. It’s a legal process. Texas, like other states, has rules for how often you can file for bankruptcy. Let’s discuss the types of bankruptcy, the frequency of filing, and important factors to consider before deciding to file for bankruptcy in Texas.

Types of Bankruptcy

There are two main types of bankruptcy in Texas: Chapter 7 and Chapter 13. Each type has its own set of eligibility requirements, procedures, and consequences.

  • Chapter 7 Bankruptcy

Also termed liquidation bankruptcy, this type of bankruptcy means selling off the things you own that aren’t protected to pay back what you owe. This bankruptcy is for people who don’t have much money or assets and can’t pay off their debts. Completing Chapter 7 bankruptcy usually takes four to six months.

  • Chapter 13 Bankruptcy

Under Chapter 13, the debtor can set up a plan to repay their debts in three to five years. This is called a reorganization bankruptcy. Individuals with a steady income who can pay back some of their debts can use this bankruptcy option. Chapter 13 bankruptcy lets people save their homes from being taken away, catch up on missed payments, and change how they pay their debts.

Frequency of Filing for Bankruptcy in Texas

You can file for bankruptcy in Texas based on what type you’ve filed before and what type you want to file now. The frequency of filing depends on this. The following are the timeframes between bankruptcy filings:

  • Chapter 7 to Chapter 7

Once you’ve filed for Chapter 7 bankruptcy and got a discharge, you’ll need to wait eight years before filing again.

  • Chapter 13 to Chapter 13

After a discharge from Chapter 13 bankruptcy, you need to wait for two years before filing Chapter 13 bankruptcy again.

  • Chapter 7 to Chapter 13

After filing for Chapter 7 bankruptcy and receiving a discharge, you need to wait for four years from the previous filing date to file for Chapter 13 bankruptcy.

  • Chapter 13 to Chapter 7

If you got a Chapter 13 bankruptcy discharge, you need to wait six years before filing for Chapter 7 bankruptcy. You might not have to wait if you paid all your unsecured debts in the last Chapter 13 bankruptcy or paid at least 70% of them, and the court decides you tried to pay.

Factors to Consider Before Filing for Bankruptcy

Before filing for bankruptcy, you must keep in mind these important factors:

  • Financial Situation

Assess your finances and decide if bankruptcy is the right choice for you. Before declaring bankruptcy, think about other ways to manage your debt. You could try credit counseling or debt settlement as alternatives.

  • Eligibility

Make sure you qualify for the bankruptcy type you want to file. To be eligible for Chapter 7 bankruptcy, you need to pass a means test. This test compares income to the average income in Texas. To be eligible for Chapter 13 bankruptcy, you need a steady income and limited amounts of debt.

  • Impact on Credit

Filing for bankruptcy will have a significant impact on your credit score. Filing for Chapter 7 bankruptcy will show up on your credit report for ten years. Chapter 13 bankruptcy will stay on your credit report for seven years. It can be hard to get credit, a place to live, or a job when this happens.

  • Legal Advice

Get advice from a bankruptcy lawyer who knows the process. They will help you decide if it’s best for you and guide you through the legal steps.