The thought of filing bankruptcy sometimes strikes fear in the hearts of debtors, who think they have to give up everything of value to repair their financial affairs. However, both state and federal property exemptions exist to ensure that bankruptcy filers can keep certain belongings.
Texas exemptions include homesteads (your primary residence), insurance policies, pensions and some personal property (such as vehicles and clothes). Bankruptcy attorneys can help debtors identify which exemptions apply prior to filing for bankruptcy.
Texas Bankruptcy Exemptions
Under the Texas Property Code exemptions statute, Texans filing for bankruptcy may be able to keep:
- Their homestead, or their primary residence, of an unlimited amount under 10 acres within a city or town.
- Personal property, such as motor vehicles, furnishings, family heirlooms and jewelry worth up to $30,000 for an individual, or $60,000 for a family.
- Pensions and tax-exempt retirement accounts, including 401(k)s and IRAs.
- Support payments, including child support and spousal support.
Other exemptions include life and health insurance, public benefits, unemployment, workers' compensation, unpaid commissions or wages, and "tools of the trade" (such as farming implements).
Additional Federal Bankruptcy Exemptions
In some cases, claiming federal bankruptcy exemptions may be more advantageous to a debtor. Retirement benefits like social security, veterans' benefits and other military pensions are allowable exemptions under federal law. Survivor's benefits for judges, court employees and military service workers are also exempt, as well as death and disability benefits for government employees, longshoremen and those receiving war risk hazard compensation. Other miscellaneous exemptions exist that may help certain people.
Dispelling Financial Fears
Many Texans living in financial fear may have misconceptions about filing for Chapter 7 or Chapter 13 bankruptcy protection. They may think a bankruptcy on their records will strip them of their possessions and ruin their financial futures. However, with the help of an experienced Plano bankruptcy attorney's advice to dispel these fears, they will realize that filing for bankruptcy does not leave them homeless, penniless and devoid of personal property.
Instead, state and federal exemptions allow debtors to maintain a reasonable standard of living while they get back on their feet. If you are contemplating bankruptcy, do not be afraid to contact a Texas bankruptcy lawyer for a consultation about which exemptions apply to your unique financial situation.
