What do I get to keep in a Texas bankruptcy?

Texas bankruptcy laws provide a wide variety of exemptions that protect your property during the process.

If you have been struggling with debt, you may be interested in the relief that bankruptcy offers, but have hesitated seeking help because you have heard that you would have to sell your property during the process. Although some debtors may lose property during bankruptcy, most do not, contrary to some widely held bankruptcy myths. The reason for this is that bankruptcy exemptions protect people's most treasured assets from the reach of their creditors.

Under the bankruptcy laws, only non-exempt property may be sold. Property covered by exemptions is removed from the bankruptcy estate. As a result, it cannot be sold. Exemptions originate in both state and federal law. In Texas, you have the option of picking whether you would like the state or federal exemptions to apply in your bankruptcy matter. However, most filers opt for Texas' exemptions because they protect more property in the majority of cases.

Exemptions in Texas

In many cases, a debtor's most treasured asset is his or her home. In Texas, this important asset is well covered. Under the law, Texas residents may exempt their primary residence and all property improvements to the residence from the bankruptcy estate. There is no limit to the amount that may be exempted, but the residence must be no larger than 10 acres in an urban area or 100 in a rural area.

The homestead exemption is helpful whether you file for Chapter 7 or Chapter 13 bankruptcy. In Chapter 7, as long as the mortgage is paid throughout the process, your residence, no matter how valuable it is, may never be sold to satisfy your debts. In Chapter 13, the value of the home is deducted fro m the value of your bankruptcy estate, the amount of which determines how much you have to pay each month under the repayment plan. As a result, the exemption can make the plan payments even more affordable.

Aside from the valuable homestead exemption, Texas' exemptions also protect a wide variety of personal property. Under the law, you can exempt up to $60,000 of personal property if you are married and $30,000 if you are single, minus any encumbrances or liens. Under the law, you may exempt the following types of personal property (up to the limit):

• Clothing

• Heirlooms and furniture

• The equity in one motor vehicle per licensed driver in the household

• Work tools and equipment

• Pets

• Jewelry with a value up to $15,000

• Bicycles and other athletic equipment

The personal property exemption allows you to keep your important personal items as well as tools that you rely upon to make a living.

An attorney can help

The laws regarding exemptions are complicated and full of exceptions. As a result, if you are considering bankruptcy, it is important to contact an experienced bankruptcy attorney. An attorney can advise you on how bankruptcy would affect your individual situation and ensure that you get the maximum benefit from the exemptions available to you.

Keywords: bankruptcy exemptions, homestead exemption