Bankruptcy filings have climbed steadily through 2026, and Chapter 7 accounts for much of that increase. The causes are familiar to anyone watching a household budget right now, including elevated interest rates, record consumer debt, and living costs that have not eased. What the numbers do not explain is how the process actually works.
What the Filing Data Shows
There were 32,651 individual Chapter 7 filings nationwide in July 2026, a 12 percent increase over the same month a year earlier. Total filings rose 10 percent. Household debt has reached roughly $18.8 trillion, according to Epiq and ABI.
Texas contributes a large share of that volume. Houston-area cases run through the Southern District of Texas, and the pattern there tracks the national one closely. At Leinart Law Firm, most of the people we meet waited far longer than they needed to before asking a single question.
What Chapter 7 Does
Chapter 7 is called a liquidation case, and that term misleads people. The large majority of consumer filings are no-asset cases. A trustee reviews your property, applies the exemptions you claim, and typically finds nothing available to sell. Qualifying unsecured debts are then wiped out. Secured debts work differently. A car loan or a mortgage survives the case unless you surrender the property, so the decision about what to keep comes early.
Who Qualifies
Eligibility turns on the means test. If your household income falls below the Texas median for your family size, you qualify. Above that line, a second calculation looks at disposable income after allowed expenses. Plenty of people who assume they earn too much still pass. The median figures also update twice a year, so a household that failed the test last spring may clear it now.
What Texas Law Protects
State exemptions here are among the broadest in the country. In most cases, filing lets you keep:
- A homestead, with no dollar cap, subject to acreage limits
- Retirement accounts and most life insurance proceeds
- A vehicle for each licensed member of the household
- Household goods, clothing, and tools of your trade
- Current wages
How Long a Case Runs
The timeline is shorter than people expect. Filing triggers the automatic stay, which halts garnishments, foreclosure activity, and collection calls the same day. The trustee meeting follows roughly a month later. Discharge usually arrives about three months after that meeting.
Timing matters in ways that aren’t obvious from the outside. A discharge is available only once every eight years. Filing before a foreclosure sale date is a different case than filing after one. A Houston Chapter 7 bankruptcy lawyer can tell you whether the calendar is working for you or against you.
Most people call after a garnishment starts or a suit lands. Calling before either one leaves more options open, not fewer. A Houston, TX Chapter 7 bankruptcy lawyer at Leinart Law Firm can look at your income and your property and say whether Chapter 7 fits, whether Chapter 13 fits better, or whether nothing needs filing yet.