Many homeowners who would benefit from bankruptcy avoid filing because they worry about losing their home, their car and other assets. In fact, the court allows exemptions for eligible property, allowing you to retain the basics you need to make a living and maintain your household.
Before choosing to file bankruptcy, learn more about how exemptions let you keep your assets in Texas, a state known for debtor-friendly laws about retaining personal property.
Texas residents filing for bankruptcy can keep an unlimited amount of equity in their homes. This means if you own a million dollar home outright, you can keep it in bankruptcy as long as you live in it. This law is quite different from the federal exemption observed by some states, which allows you to keep only $25,150 of equity in your primary home.
Remember that if you sell your home shortly after you receive a bankruptcy discharge, the proceeds must go to a new home that will serve as your primary residence.
In Texas, you can keep unlimited equity in one vehicle for every licensed driver in the house. That means if you, your spouse and two children all live in the home and you each own a car, you can keep all four vehicles no matter how much they are worth. Avoid buying an expensive car right before you file, however, since the trustee appointed by the court will review your recent bank statements to see how much disposable income you could have used for debt repayment.
Personal property exemptions
In addition to the home and vehicle exemptions, Texas allows personal property exemptions of up to $50,000 for an individual and $100,000 for a married couple. Some of the items you may keep under these guidelines include:
- Tools and work equipment
- Jewelry worth up to 25% of the total exemption amount
- Family heirlooms
- Home goods and furniture
When you are ready to explore whether bankruptcy is right for you, make a list of your property, assets and debts. Your bankruptcy attorney will use this information to help you determine qualifying exemptions in Texas.