If your income is higher than the Texas median household income, you must pass the Texas means test before becoming eligible for Chapter 7 bankruptcy. The means test involves your average household income.

The type of bankruptcy you are eligible for and the category of a particular debt determines whether or not a debt can be wiped out by bankruptcy. Debts that are eligible for removal are known as dischargeable debts.

As we’ve written in the last two blogs, Texas has a generous set of exemptions. As a result, all of the assets belonging to most people filing a straight Chapter 7 bankruptcy are exempt, protected from the reach of the bankruptcy trustee and, thus, from their creditors.

In a Chapter 7 bankruptcy, federal law lets you use Texas exemptions, which usually protect all your assets from your creditors and from the bankruptcy trustee.

More than most other states, Texas protects its residents from their creditors with relatively generous exemptions both for their homestead and for their personal property.