For individuals and businesses in financial distress, bankruptcy in Texas can offer a fresh start. But one of the most common questions people ask is, “How much debt do I need before I can file?” The answer isn’t as simple as a single dollar figure—bankruptcy eligibility depends on the type of bankruptcy, your income, and your overall financial situation.
Understanding the requirements for Chapter 7 and Chapter 13 can help you decide whether now is the right time to consult a bankruptcy attorney in Corpus Christi or elsewhere in Texas.
No Strict Minimum Debt Requirement
Under federal bankruptcy law, there is no set minimum amount of debt required to file for bankruptcy in Texas. However, it’s not always practical to file over a very small debt balance. Because bankruptcy affects your credit and has long-term implications, most people reserve it for situations where debt has become unmanageable—typically tens of thousands of dollars in unsecured debt such as credit cards, personal loans, or medical bills.
If you are unsure whether your debt load is significant enough to warrant filing, speaking with a debt relief attorney in Corpus Christi can help clarify your options.
Chapter 7 Bankruptcy Eligibility: The Means Test
For Chapter 7, which can wipe out most unsecured debts, eligibility depends largely on income. Texas uses the means test, a calculation that compares your household income over the past six months to the median income for a similar household size in Texas.
- If your income is below the median, you may qualify for Chapter 7 automatically.
- If your income is above the median, you may still qualify after deducting certain allowed expenses such as housing, transportation, and medical costs.
Because Chapter 7 can quickly discharge debts like credit card balances, medical bills, and personal loans, it’s often a lifeline for those overwhelmed by collection calls or facing a credit card debt lawsuit in Texas.
Chapter 13 Bankruptcy: Managing Higher Debt Loads
Chapter 13 is a repayment plan that allows you to catch up on secured debts, such as mortgages or car loans, while paying a portion of your unsecured debt over three to five years.
However, there are debt limits for Chapter 13:
- Unsecured debts must be less than $526,700.
- Secured debts, must be less than $1,580,125.
This option is often used by homeowners facing a foreclosure lawsuit in Texas or borrowers trying to stop vehicle repossession while keeping their property.
Why Debt Amount Isn’t the Only Factor
The decision to file for bankruptcy in Texas should consider more than just how much you owe. Other factors include:
- Your income stability and future earning potential.
- Whether you are already facing a debt collection lawsuit in Corpus Christi.
- The types of debts you hold, some, like student loans or certain tax debts, are harder to discharge.
Professional Guidance is Essential
Bankruptcy law is complex, and a misstep can lead to case dismissal or loss of assets you could have kept. A skilled bankruptcy lawyer in Corpus Christi can evaluate your situation, explain your options, and determine whether Chapter 7 or Chapter 13 is the right fit. They can also advise on alternatives, such as debt settlement, that may resolve your financial problems without filing.
No magic number qualifies you for bankruptcy, but if your debt has become unmanageable and you’re at risk of losing assets, it’s time to explore your legal options. Speaking with an experienced attorney about bankruptcy in Texas can help you protect your property, end collection actions, and take the first step toward financial recovery.
Contact the Law Office of Joel Gonzalez today at (361) 654-DEBT to discuss your options for bankruptcy in Texas and get a clear path toward financial freedom.
