Chapter 7 is the fastest path to debt relief. Most unsecured debts are eliminated in 3-4 months. Here is what Houston residents need to know.
Chapter 7 discharges most unsecured debts including credit cards, medical bills, personal loans, and old utility bills. It does not discharge student loans (in most cases), recent taxes, child support, alimony, or debts incurred through fraud.
Chapter 7, sometimes called "liquidation bankruptcy" or a "fresh start," eliminates most unsecured debts. A court-appointed trustee reviews your assets. If you have non-exempt property, the trustee may sell it to pay creditors - but most Chapter 7 cases are "no-asset" cases where the filer keeps everything.
In Houston, the vast majority of Chapter 7 filers keep all their property because it falls within Texas exemption limits.
To file Chapter 7, you must pass the means test. This compares your household income to the state median:
For a single filer in Texas, the current median is approximately $56,000/year. These figures increase with household size.
Exemptions determine what property you keep. Texas requires you to use state exemptions - you cannot choose the federal exemption system.
| Property | Texas Exemption | Statute |
|---|---|---|
| Homestead | Unlimited (10 acres urban / 100 acres rural) | Tex. Prop. Code 41.001 |
| Vehicle | Fully exempt (1 per licensed household member) | Tex. Prop. Code 42.002 |
| Personal property (aggregate) | $60,000 married / $30,000 single | Tex. Prop. Code 42.001 |
| Clothing | Included in personal property | Tex. Prop. Code 42.002 |
| Tools of trade | Unlimited | Tex. Prop. Code 42.002 |
| Retirement accounts (IRA, 401k, pension) | Unlimited | Tex. Prop. Code 42.0021 |
| Social Security benefits | Unlimited | 42 U.S.C. 407 |
| Wages (current) | Unlimited (non-garnishable in Texas) | Tex. Prop. Code 42.001 |
| Life insurance (cash value) | Unlimited | Tex. Ins. Code 1108.051 |
| Health aids | Unlimited | Tex. Prop. Code 42.002 |
Chapter 7 discharges most unsecured debts including credit cards, medical bills, personal loans, and old utility bills. It does not discharge student loans (in most cases), recent taxes, child support, alimony, or debts incurred through fraud. See section 523(a) for the full list.
The means test compares your household income to the Texas median. If your income is below the median for your household size, you automatically qualify. If above, a more detailed calculation determines whether you have enough disposable income to fund a Chapter 13 plan instead.
From filing to discharge, Chapter 7 typically takes 3-4 months. The 341 meeting of creditors occurs about 30 days after filing, and the discharge is usually entered about 60 days after that.
Texas exemptions protect: homestead equity of Unlimited (10 acres urban), vehicle equity of $0 - fully exempt if needed for work, personal property of $60,000 (married) / $30,000 (single), and retirement accounts. Full exemption details.
Use the free 1328(f) screener to check whether a prior discharge affects your eligibility for a new discharge.
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