Find Bankruptcy Lawyers Near You in Austin, TX

The typical cost for a Chapter 7 bankruptcy case in Austin, Texas ranges from $1,200 to $2,500 in attorney fees, plus the $338 court filing fee. For Chapter 13 cases, attorney fees are higher, usually between $3,000 and $5,000, because the case involves a multi-year repayment plan and more court oversight. Many lawyers offer payment plans that allow you to pay the fee in monthly installments before filing, and some may accept credit cards. Low-income individuals may qualify for pro bono assistance through organizations like Texas RioGrande Legal Aid, though availability is limited.

This information is general and does not constitute legal advice. Bankruptcy laws and fees can change, and individual circumstances vary significantly. You should consult with a qualified bankruptcy attorney in Austin to receive advice tailored to your specific financial situation.

Bankruptcy law in Austin, Texas provides individuals and businesses with a legal pathway to address overwhelming debt. The three primary chapters available are Chapter 7, Chapter 13, and Chapter 11. Chapter 7, known as liquidation bankruptcy, allows individuals to discharge most unsecured debts such as credit card balances and medical bills by selling non-exempt assets through a court-appointed trustee. This chapter is typically suitable for those with limited income and few valuable assets who cannot afford a repayment plan. Chapter 13, or reorganization bankruptcy, requires filers to propose a three-to-five-year repayment plan to creditors, making it ideal for individuals with a steady income who want to keep their property, such as a home or car, while catching up on missed mortgage or car payments. Chapter 11 is primarily designed for businesses but is also available for high-income individuals whose debts exceed the Chapter 13 limits, which as of 2024 are $2,750,000 in secured and unsecured debts combined. Choosing the right chapter depends on your income, asset value, debt type, and long-term financial goals.

Texas law offers distinct advantages for bankruptcy filers through its generous exemption system. Unlike many states, Texas does not allow filers to choose between state and federal exemptions; you must use Texas state exemptions if you have lived in the state for at least two years. The Texas homestead exemption is one of the most protective in the nation, allowing an unlimited amount of equity in your primary residence, provided the property is on 10 acres or less in a city or 100 acres or less in a rural area. For vehicles, Texas exempts up to $15,000 in equity per person, or $30,000 for a married couple filing jointly. The Texas wildcard exemption permits you to protect up to $60,000 of any personal property if you do not use the homestead exemption, or $30,000 if you do use it. These exemptions are codified in the Texas Property Code, specifically Sections 41.001 and 42.001 through 42.005, and they allow many filers to keep all their assets while discharging unsecured debts.

The means test is a critical step in determining eligibility for Chapter 7 bankruptcy. This test compares your current monthly income, averaged over the six months before filing, to the median income for a household of your size in Texas. As of 2024, the median income for a single-person household in Texas is approximately $60,000 per year, for a two-person household about $75,000, for a three-person household about $85,000, and for a four-person household about $100,000. If your income falls below the median, you automatically qualify for Chapter 7. If it exceeds the median, you must complete a detailed calculation of your disposable income, subtracting allowed living expenses based on IRS standards. If your disposable income over five years is less than $8,175, you still qualify for Chapter 7. If it is between $8,175 and $13,650, you may qualify depending on the percentage of debt you can repay. If it exceeds $13,650, you are presumed to abuse the system and must file under Chapter 13 instead. An Austin bankruptcy lawyer can help you run this calculation accurately.

Filing for bankruptcy triggers an automatic stay, which is a court order that immediately stops most creditor collection actions. This means debt collectors cannot call you, send demand letters, garnish your wages, or repossess your property once the case is filed. The automatic stay remains in effect until the bankruptcy case is closed, dismissed, or a creditor obtains court permission to proceed. The timeline from filing to discharge varies by chapter. For a straightforward Chapter 7 case, you can expect a discharge of debts approximately 90 to 120 days after filing, assuming no complications. For Chapter 13, the discharge occurs after you complete your repayment plan, which lasts three to five years. Before filing, you must complete a mandatory credit counseling course from an approved provider, which typically takes one to two hours and costs around $10 to $50. After filing but before discharge, you must complete a debtor education course, also about two hours long and similarly priced. These courses are required by the Bankruptcy Code and cannot be skipped.

The costs of bankruptcy in Austin include court filing fees and attorney fees. The federal filing fee for Chapter 7 is $338, and for Chapter 13 it is $313, as of 2024. These fees can sometimes be paid in installments with court approval. Attorney fees for a Chapter 7 case in Austin typically range from $1,200 to $2,500, depending on the complexity of your assets and debts. For Chapter 13, attorney fees are higher, usually between $3,000 and $5,000, because the case involves a multi-year repayment plan and more court oversight. Many Austin bankruptcy lawyers offer payment plans, allowing you to pay the fee in installments before filing. For those with very low income, pro bono resources are available through organizations such as Texas RioGrande Legal Aid and the Volunteer Legal Services of Central Texas, which may provide free or reduced-cost representation. Additionally, the United States Bankruptcy Court for the Western District of Texas, which serves Austin, offers self-help resources for filers who cannot afford an attorney.

Life after bankruptcy involves both challenges and opportunities for rebuilding credit. A Chapter 7 discharge remains on your credit report for 10 years from the filing date, while a Chapter 13 discharge stays for 7 years. However, you can begin rebuilding your credit immediately after discharge. Strategies include obtaining a secured credit card, which requires a cash deposit that serves as your credit limit, and making small purchases and paying them off in full each month. You can also become an authorized user on a family members credit card with good payment history. Some lenders offer credit-builder loans, where the loan amount is held in a savings account until you finish paying it off. It is important to note that not all debts can be discharged in bankruptcy. Student loans are generally not dischargeable unless you can prove undue hardship, which is difficult to do. Most tax debts, particularly income taxes less than three years old, are also not dischargeable. Child support, alimony, and debts from fraud or intentional harm survive bankruptcy as well. A fresh start is possible, but careful financial planning after discharge is essential.