How to File for Bankruptcy in Travis County, Texas

If you are being harassed by creditors who are constantly calling, texting, and sending threatening letters, filing for bankruptcy may be the best solution to your debt problems. Here in Travis County, thousands of individuals file for personal bankruptcies every year. There is no shame or stigma to filing for bankruptcy. For businesses, filing for bankruptcy is often a necessary financial and economic decision. As an example, Gourdoughs, known for its amazing doughnuts, recently filed for bankruptcy protection. See Austin Business Journal article here.

The same can be true for personal bankruptcies since debt-burdened individuals need to obtain debt relief and to protect their personal and family assets. Here is a quick rundown on how filing for bankruptcy works in Travis County.

Federal Courts

Bankruptcies are filed pursuant to federal law and, consequently, bankruptcies are handled by the federal courts. Texas has four federal court districts with Travis County being in the Western District. The main courthouse is located at 903 San Jacinto Boulevard in Austin.

Bankruptcy is a legal process that officially begins with the filing of a Bankruptcy Petition. The petition is a set of court forms containing many pages, which list the details of the debtor's income, expenses, assets, debts, financial accounts, and other information. The purpose of a bankruptcy is to provide debt relief for qualified debts. Debt relief can be in the form of discharge or reorganization. Individual debtors generally file under Chapter 7 for debt discharge and under Chapter 13 for debt reorganization. Not all debtors are eligible for Chapter 7 discharge. Further, not all debts can be discharged or reduced via bankruptcy. Examples of non-dischargeable debts include student loans, taxes owed to various governmental entities and child support obligations.

When a petition is filed, the court assigns a bankruptcy judge to oversee the case. In addition, a bankruptcy trustee is assigned to help the judge and to handle the day-to-day processing. For example, the trustee will preside over the §341 Meeting of Creditors which the debtor must attend. The location, date and time for the Meeting of Creditors is assigned when the petition is filed.

The Steps Required Before Filing

Before filing a petition, a debtor must undertake four preliminary steps.

First, the debtor should consult an experienced debt relief attorney for advice and counsel. A bankruptcy can be filed without an attorney, but time-consuming mistakes are avoided and the results are more successful if the debtor has trusted counsel to help.

Second, debtors must gather documents and information. As noted, all debtors must list their assets and debts and other information on the petition. In general, the information must be complete and accurate at the time the petition is filed. Thus, copies of paychecks, bills, financial statements and the like must be gathered to facilitate completion of the petition. Some debtors find that getting a copy of a recent credit report is a quick and efficient method of gathering the full list of creditors. Note that creditors' addresses and account numbers must be provided on the petition. Creditors must also be grouped as "secured" or "unsecured" creditors. Debtors will also need copies of their last two years of tax returns. Here is another place where a good debt relief attorney can help. As the petition is completed, your attorney can make sure the petition is being prepared properly and can prompt for income, expenses, debts, assets or other missing information.

Third, the debtor must decide whether to file under Chapter 7 (discharge) or Chapter 13 (debt reorganization). As noted, not every debtor is eligible for full discharge of qualified debts. In general, discharge is only available for mid-to-lower-income individuals. The income levels are based on the average gross monthly income for where the debtor lives and the size of the debtor's household. For example, as of May 2020, for debtors in Austin living in a single-person household, the income threshold is about $4,200 a month. A debtor making less than that amount is eligible for Chapter 7 discharge. Other income levels for larger households are approximately:

● $5,575 for a two-person household

● $6,100 for a three-person household

● $7,180 for a four-person household

Even if the debtor's gross monthly income exceeds these amounts, debtors might still qualify for Chapter 7 under other tests. This is another area where a good debt relief attorney can help.

Fourth, debtors must take a credit counseling course (one of two courses that are required). Almost all individual debtors use online on-demand counseling services. These credit counseling courses are mandated by the Bankruptcy Code and must be completed sometime within 180 days before the petition is filed. At the end of the course, a certificate of completion is provided..

When the petition is complete and the debtor has finished the credit counseling course, the petition is filed with the court. Unless a waiver or an installment payment plan is approved by the court, the debtor must pay the court filing fees which are currently

● $325 for a Chapter 7

● $310 for a Chapter 13

What Happens Post-Filing?

Once the petition is filed, all efforts by creditors to collect debts must stop. This is required by the Bankruptcy Code's "automatic stay." The automatic stay provides immediate relief from harassment by creditors. Creditors become aware of a bankruptcy petition because the court sends a notice to all listed creditors. This is the reason that addresses and account numbers must be listed on the petition.

Post-filing, there are two notable requirements. First, about a month after the filing, debtors must attend their §341 Meeting of Creditors. This is often the only formal proceeding at which an individual debtor must appear. As noted, the trustee presides and the meeting is generally held in a conference room at or near the federal courthouse. Most creditors do NOT attend, since the meeting is mostly consumed with the trustee asking questions and verifying information. Generally, at or around the time of the Meeting of Creditors, the debtor will be asked to sign any reaffirmation agreement for debts that the debtor wishes to keep. For example, if permitted, a debtor might reaffirm a car loan, continue making the monthly payments and retain the car.

Second, debtors must take a second mandated course relating to financial management. This course is intended to help with budgeting and to help debtors avoid falling back into crushing debt. Again, most debtors take this financial management course online. The Certification of Completion must be filed with the court.

Following the Meeting of Creditors, a 60-day deadline begins to run during which creditors and the trustee can file objections to the bankruptcy. In general, if no objections are filed, then the bankruptcy is completed within the following two to four months.

Contact Our Skilled Bankruptcy Attorneys Today

For more information and for help filing your bankruptcy, contact our skilled bankruptcy attorneys. Reach out today to schedule your free consultation.