Bankruptcy exemptions help debtors keep some of their property from being seized by the court. In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. If you are married, additional exemptions apply.
In bankruptcy filings, all non exempt assets are placed in a bankruptcy estate and managed by the court’s appointed trustee. Bankruptcy exemptions allow filers to keep a portion of their properties without having to think about paying off debts owed to lenders. Knowing which properties fall under bankruptcy protection depends on the filing chapter of the bankruptcy petition and the state where you filed your case.
You need to review state bankruptcy laws and check whether federal bankruptcy exemptions apply before filing bankruptcy. What is unique in Texas is that a filer may choose to apply either state or federal exemptions when they file for bankruptcy.
In Texas, you may file for exemptions in your homestead, personal property, personal accounts, or vehicles. In addition, for married couples, each may claim exemption for properties jointly owned, allowing them to double the exemption limit.
Conditions for Homestead Exemption
Under Texas exemption laws, an individual’s residence may be excluded from the bankruptcy estate if it is less than 10 acres and is situated in a city, town, or village, or if the total property area is less than 100 acres in the country. Under the same laws, families may apply for double the area limit, with homes measuring 200 acres or less being exempted.
A debtor may also choose to sell the home and liquidate his asset. In such a case, under the Texas Property Code, the exemption still applies within the first six months after it was sold.
Bankruptcy Exemptions for Motor Vehicles
Texas bankruptcy laws allow a filer to have the full value of a motor vehicle exempted from bankruptcy. Moreover, for individuals or families owning more than one vehicle, every licensed family member is entitled to have one vehicle listed for exemption.
If you have a family member owning a vehicle but has no license, you may still file for exemption as long as the vehicle is operated by a licensed third party..
Exempted Personal Properties for Individuals and Families
All assets and properties other than your real estate are considered part of your personal property.
Individuals without a family may have their personal properties exempted from the bankruptcy estate if the total asset value does not exceed $50,000. In contrast, for families, the head may file for a higher exemption limit of not more than $100,000.
Examples of personal properties which you may be filed for exemption are the following: pets, farm animals and livestock, clothing, food, home furnishings, household goods, family heirlooms, jewelries (as long as these does not make up more than 25% of exemptions), athletic or sport equipment, bicycles, firearms (not more than two), heath aids, religious books such as Bibles, and even burial plots.
A bankruptcy trustee can help you determine the value of your personal properties and help decide which can be filed for exemption.
Pensions, Retirement, and Health Savings Account Exemptions
Borrowers may also request to have their pensions and retirement accounts protected from creditors under the state bankruptcy law. Under the Texas Insurance Code, exempted accounts include the following:
- Retirement funds or accounts enjoying special tax exemptions under the U.S. Tax Code
- Retirement and pension benefits for district and county employees, municipal and state employees, elected officials, teachers, firefighters, police officers, and judges
- Survivors benefits for firefighters, law enforcement officers, and emergency medical employees
- Tax-deferred retirement benefits
- Life, health, accident, or annuity benefits
- Uniform group benefit insurance for Texas employees
- Group insurance for Texas public school employees
- Texas state college or university employee benefits.
Non Exempt Debts
Although claiming exemptions can ease your hardship and help manage your remaining finances, take note that under the Bankruptcy Code, student loans, child support owed, or unpaid alimony will not be discharged by the bankruptcy court. You still have to pay back your debt to the creditor.
Aside from going through the non-exhaustive list of exemptions above, determining which properties are exempted and which are non-exempt under Texas laws may be done by bankruptcy trustees who are appointed by the country to oversee estates. It may also be done by bankruptcy attorneys hired to litigate a case. Your lawyer will also explain to you all applicable Texas laws and provide you with much needed credit counseling.
If you need help understanding exemptions and bankruptcy filing, you may consult with a Texas bankruptcy attorney Allmand Law Firm, PLLC. Our lawyers are experienced to provide legal counsel in bankruptcy cases and will help protect your assets by maximizing the exemption laws.
Contact our law firm here and schedule your free initial consultation.