Filing for bankruptcy can feel like standing at the edge of a cliff. There is pressure. There is fear. There is the question of what comes next. For people in Texas who want to file Chapter 7 bankruptcy, the income limit is one of the biggest hurdles. That limit is set by what is called the means test. It is there to make sure bankruptcy is used by people who truly need it. The means test looks at your income and compares it to the median income in Texas. If your income is below that number, you can usually file for Chapter 7 without a problem. If it is higher, you may have to file for Chapter 13 instead. That means you will need to make a payment plan to pay back some or all of your debts.
Understanding the Texas Bankruptcy Means Test
The U.S. Census updates the income figures every year. As of now, the income limit for a single person in Texas is about $58,121 a year. For a household of two, it is about $76,171. For three people, it goes up to around $83,835. And for four, it is about $99,160. Add about $9,900 for each person beyond that. These numbers matter. They are the dividing line between automatic Chapter 7 approval and a deeper dive into your financial situation. If you make less than the limit for your household size, you pass the first part of the test. That means you are presumed to qualify for Chapter 7. If you make more, you go to the second part of the test. This part looks at your expenses, like rent, food, child care, and other necessary costs. If those costs bring your disposable income low enough, you may still qualify. But it is a harder fight.
Why the Income Limit Matters
Think of it like a doorway. Chapter 7 is meant to help people who have no way to catch up. It wipes out credit cards, medical bills, and other unsecured debt. But not everyone can walk through that door. The income limit is the lock. Only people below the line get the key. That may seem unfair, especially if debt feels crushing. But the court wants to make sure people are not using Chapter 7 to avoid paying when they can afford to. That is where Chapter 13 comes in. It allows people to keep their property and pay what they can over time. Sometimes, even people below the income limit choose Chapter 13 to stop a foreclosure or repossession.
What If Your Income Changes?
Life happens fast. You might lose a job. Pick up more hours. Get a bonus. The income limit is based on the last six months of income. That means a big change can help or hurt your case. If your income dropped recently, you may want to wait a little before filing. That way, the lower numbers pull your average down. If your income went up, you may need to act fast before the window closes. Timing is everything.
If you’re unsure where you stand with the income limit for bankruptcy in Texas, let’s talk. At Sims Bankruptcy Law, PLLC, we’ll walk through your numbers and help you make the right move. Every case is personal. Every detail matters. Call 254-304-7161, reach out and start fresh now.