Whether you want to file Chapter 7 or Chapter 13 bankruptcy, your assets are a major factor in deciding what and how much you need to pay your creditors. However, Texas law is very generous when it comes to exemptions. These exemptions limit what can be sold under Chapter 7 and the amount you are required to pay under Chapter 13. Here are the five primary assets that are exempt from bankruptcy requirements in Texas.
1. Your Primary Residence Is Exempt
Under the Texas Homestead Exemption, you are allowed to keep your residence and up to a certain amount of land associated with it. The amount of exempt acreage depends on whether you live in a city or out in the country.
This amount is doubled for married couples and families. You have to have had this home for a certain length of time for it to be eligible.Otherwise, you will be subject to federal limits, which are much more restrictive. If you sell the property, the assets are also exempt for a certain length of time.
2. Your Vehicle Is Exempt
You are allowed to keep one vehicle per licensed driver in the household, including motorcycles and quads. Unlike the federal exemption laws, the value of the vehicle does not matter except in certain Chapter 7 situations.
If you have someone in the household who cannot drive but depends on a vehicle that someone else drives, then that vehicle is also exempt. It is assumed that your vehicles are paid for or you are current on your payments. If you are behind on your payments, then the exemption will not apply.
3. Personal Property Is Substantially Protected
Your personal property, up to a certain amount, is protected from creditors. Texas law has a much higher allowance than federal law. What you can keep includes your pets and pet accessories, firearms, livestock, furniture and family heirlooms.
Even the food you own is included as a possible exemption. If the total amount of all your possessions are over the limit, then you will need to sort everything out to determine what you want to keep and what you want to sell to meet your bankruptcy obligations.
4. Your Retirement Fund or Public Assistance Is Safe
Texas exemptions include most pensions and retirement funds in a similar way that the federal exemption does. Public employees, teachers and church employees are exempt, as well as any account with a tax-deferred status.
In addition, if you're receiving public assistance of any type, including crime victim funds, worker's compensation and medical assistance, then those sources of income also won't be held against you in bankruptcy court.
5. Your Wages Are Mostly Protected
Unlike other states, Texas law goes a long way towards protecting your wages, alimony or support payments from garnishment. However, not all wages and sources of income are exempt. Exceptions include owing child support, being default on a student loan or having unpaid taxes and penalties.
This protection does not mean that they can't go after other sources of cash such as bank accounts and stocks. You can have your wages garnished if you have a judgment from another state or if the wages you earn are paid by an out-of-state employer.
In Texas, your money and assets are generally given a higher protection when you file for bankruptcy compared to federal allowances. You are also given a choice as to whether you want to use Texas exemptions or federal exemptions when you file, so it's important to know how both apply to you.
Everyone's situation is different, and that's why it's important to have an experienced bankruptcy attorney on your side. Hickson Law, PC help you sort out exemption requirements, so you can keep the things that are most important to you.