• Filing for bankruptcy protection can help consumers get a handle on their finances.Paying Bills image by ne_fall_photos from Fotolia.com
  
  Although many consumers try their best to avoid it, filing for bankruptcy protection can sometimes be the only way to get ahead financially. Each state has its own requirements and regulations regarding what makes a consumer eligible for filing bankruptcy, including the state of Texas. Before filing bankruptcy, consumers in Texas should ask questions about the process, along with what is required to meet the qualifications for filing.
  
  

What Properties are Exempt in Filing?

• When filing for bankruptcy protection, Texas law allows consumers to keep specific properties and monetary funds as long as they fall under the exempt amounts; the state also allows consumers to choose between Texas exemptions and the federal bankruptcy exemptions. The homestead exemption allows filers to retain a homestead dwelling on up to one acre of property that is located in a village, city or town; proceeds from sales are exempt for six months after the sale. Further, the exemption allows filers to keep 100 acres (200 acres for families) if the property is located outside of a village, city or town.
  
  Texas personal property exemptions include athletic equipment, home furnishings, family heirlooms, food, clothing, jewelry, livestock, and pets. Consumers may also keep one motor vehicle per member of the family who holds a valid driver's license. Tools of the trade, burial plots, insurance benefits, public benefits, and pensions are also exempt under Texas law.
  
  

What are the Requirements for Chapter 7?

• In order to qualify for Chapter 7 bankruptcy protection, consumers must either meet income qualifications or pass a means test, showing that the income they earn in comparison to the financial obligations they have is creating a hardship. As of 2010, if an individual in Texas makes less than $38,801 per year, he will automatically qualify for a Chapter 7 case. A two-person household must make less than $55,660; the limit for a three-person household is $59,011; with the four-person limit at $66,145. Each additional household member over four adds an additional $7,500 to the median income amount. If the consumer makes over the median income amount, he must then take the means test to determine if he qualifies for Chapter 7. The means test uses standard deduction amounts set by the IRS to determine if the consumer's income compared to expenses qualifies for a Chapter 7 case.
  
  

How Does Chapter 13 Bankruptcy Work?

• If a consumer does not qualify under the income requirements or the means test, she will have to file a Chapter 13 bankruptcy in the state of Texas. To qualify for a Chapter 13 case, Texas residents must file as individuals, and have the funds available to make the monthly payments to trustee. Chapter 13 cases can be filed in order to save a consumer's home, as the repayment plan can include past due mortgage payments to be repaid over time. After the case is filed, the consumer meets with a trustee to determine the repayment plan. Consumers will then make monthly payments to the trustee, generally by payroll deduction, for a period of no longer than five years. At the end of the time period, the case is discharged and consumers are released from any obligation to their past debts.