Debt relief is surging again. If Chapter 7 fits your facts, Texas exemptions can protect a lot. According to Epiq AACER, individual Chapter 7 filings rose year-over-year in spring 2025, and many of those cases are being heard right here in the Southern District of Texas. At The Gulley Law Firm, LLC (www.gulleylawgroup.com), we meet with Sugar Land residents every week who are trying to figure out whether Chapter 7 is a fresh start—or a risk.
Means test and common myths
Qualifying for Chapter 7 starts with the means test. This compares your household income to the state median. If you’re under the median, you usually qualify. If you’re over, there’s a second step that looks at expenses and debts.
One myth is that higher earners never qualify. In reality, we’ve seen families with steady salaries pass the means test because of mortgage payments, car loans, or medical bills. Another myth is that bankruptcy wipes out all debts—it doesn’t. Some obligations, like student loans and certain taxes, usually survive.
Texas exemptions (homestead, personal property) basics
Texas has some of the strongest exemption laws in the country, which means many assets are protected in Chapter 7. The homestead exemption can shield your primary residence, no matter its value, as long as it sits on qualifying acreage. Personal property exemptions cover household goods, clothing, retirement accounts, and even a certain amount of vehicles, depending on family size.
At The Gulley Law Firm, LLC (www.gulleylawgroup.com), we walk clients through what’s “off limits” to creditors versus what might be at risk. In many Sugar Land cases, families keep far more than they expect.
What happens to cars, credit cards, medical debt, and collections
Cars depend on equity and loan status. If your car loan is current and the vehicle’s value falls within exemptions, you often keep it. If you’re behind, Chapter 7 might give you a chance to surrender without lingering debt.
Credit cards, personal loans, and medical debt are typically dischargeable. Collections and lawsuits tied to those debts also stop once you file, thanks to the automatic stay.
Timeline, credit impact, and rebuild plan
Most Chapter 7 cases wrap up in about 4–6 months. The discharge ends most unsecured debts, giving families breathing room. The case will appear on your credit report for up to 10 years, but many Sugar Land clients start rebuilding credit within a year by using secured credit cards and keeping balances low.
Bankruptcy doesn’t mean financial life is over—it’s more like pressing reset. Judges and trustees in Houston see thousands of cases each year, and they expect people to use the system responsibly to start fresh.
Local angle: Filing in the Southern District of Texas
For Sugar Land residents, cases are filed in the Southern District of Texas, Houston Division. After filing, you’ll attend a 341 meeting of creditors, usually held in downtown Houston. These meetings are short, often less than 10 minutes, with the trustee asking basic questions about your petition.
You’ll also need to complete two courses: one before filing and one before discharge. Both can be done online, and the certificates are required parts of the case.
Charting your next move
With filings on the rise in 2025, Chapter 7 is once again a common tool for Texans facing overwhelming debt. The question isn’t just whether you qualify—it’s whether it’s the right fit for your situation. At The Gulley Law Firm, LLC (www.gulleylawgroup.com), we offer a 20-minute confidential eligibility screen to sort out myths, exemptions, and timelines so you can decide with clarity.