Your Guide to Bankruptcy in Texas: What It Is and How It Can Help

If you’re feeling buried by debt in Texas, you’re not alone — and more importantly, you're not without options. Bankruptcy is often misunderstood, but for many Texans, it can be the first step toward financial recovery. Whether you're facing credit card debt, medical bills, or creditor harassment, understanding bankruptcy and how it works in Texas could help you reclaim control over your financial life.

This guide breaks down what bankruptcy really is, the types available, and how it may help you find a way forward.



What Is Bankruptcy?

Bankruptcy is a legal process that allows individuals or businesses unable to pay their debts to eliminate or restructure those debts under the protection of federal law. Filing for bankruptcy in Texas triggers what’s known as an automatic stay — which means that most collection actions, like calls from creditors, wage garnishments, and foreclosure proceedings, must stop immediately.

Far from being a sign of failure, bankruptcy is a legitimate and often effective tool to regain control of your finances.

Types of Bankruptcy Available in Texas

In Texas, the two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Each has distinct features and requirements:

Chapter 7 Bankruptcy (Liquidation)

• Who It’s For: Individuals with limited income and few assets
• How It Works: Most unsecured debts (like credit cards and medical bills) can be discharged, meaning you’re no longer legally required to pay them
• Pros: Fast process (often completed in a few months), provides a clean slate
• Cons: You may have to surrender non-exempt property

Chapter 13 Bankruptcy (Reorganization)

• Who It’s For: People with a regular income who want to keep their property
• How It Works: You’ll create a repayment plan to pay back some or all of your debts over 3 to 5 years
• Pros: Stops foreclosure, allows you to catch up on missed mortgage or car payments
• Cons: Requires long-term financial commitment

How Bankruptcy Can Help Texans Facing Debt

Here are several ways bankruptcy may benefit you if you're struggling with debt in Texas:

Stops Harassment from Creditors
Once you file, the automatic stay goes into effect. This stops collection calls, lawsuits, wage garnishments, and repossessions.

Protects Your Property
Texas has some of the strongest property exemptions in the country. In many cases, you can keep your home, car, and other personal belongings — even in a Chapter 7 filing.

Eliminates or Reduces Debt
Depending on your situation, you may be able to erase unsecured debts entirely, or restructure them into manageable monthly payments.

Provides a Fresh Start
With debts lifted, you can start rebuilding your credit and setting new financial goals — without constant pressure from creditors.

Common Misconceptions About Bankruptcy in Texas

Myth 1: You’ll Lose Everything
Texas has generous exemption laws that allow many people to keep their home, vehicle, and essential property.

Myth 2: Your Credit Is Ruined Forever
While your credit score will be affected initially, many filers begin rebuilding credit within months. Bankruptcy can even improve your long-term credit health by eliminating unpaid debt.

Myth 3: Bankruptcy Means You Failed
Financial hardship happens for countless reasons — job loss, illness, divorce, or inflation. Bankruptcy is a legal path forward, not a dead end.

Working With the Right Legal Help

Navigating bankruptcy laws in Texas can be complex. Having the right legal guidance can make a significant difference in how effectively you move through the process. At J. Gannon Helstowski Law Firm, we work with you to understand your financial challenges and identify solutions that fit your life. Our goal is to relieve your stress and help you take back control with confidence.

Take the First Step Toward Financial Relief

If you're considering bankruptcy in Texas or want to learn about your debt relief options, schedule a free consultation today. We’ll answer your questions, assess your situation, and help you explore your next steps — with no pressure and no judgment.