The burning question when families or individuals have to file for bankruptcy is, do I lose everything? The answer to that question is no. Most importantly what do you get to keep when you file for bankruptcy and what is protected. When filing for Chapter 7 Bankruptcy a liquidation process takes place to help repay the debt. We are all familiar with the term "liquidation" but what exactly does this mean and how are you protected. When a personal asset is classified as exempt from liquidation, this means that some assets cannot be sold to repay any debts in the bankruptcy. Let's explore some of the exemptions that are protected under the State Law of Texas.
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Texas Homestead Exemption
Under the Texas Bankruptcy Code, if your home is located in a city or town and the property does not exceed one acre, your home is protected from liquidation regardless of the value of the home. If you live outside a city or town, your home and property cannot exceed 200 acres. If you are using the homestead exemption in your bankruptcy case, it is important to know that you must have lived in Texas for at least two years before filing for bankruptcy. With the homestead exemption that are other rules that do apply and some disqualifying factors. Be sure to consult with a qualified bankruptcy attorney to find out what factors may or may not apply to your bankruptcy case.
Personal Property Exemption
Under the Texas Bankruptcy Code, a single person or family and some of their assets are protected under the personal property exemption. According to the code, a single person who is not part of a family can be allowed up to $30,000 in personal asset exemptions. A family filing for the exemption can be allowed up to $60,000 in personal exemptions. Some of these personal assets in the exemption include: home furnishings, family heirlooms, jewelry, clothes, farming and ranch equipment and vehicles, tools used for a trade, athletic and sports equipment, motor vehicles, and up to two firearms.
Texas Public Assistance Exemption
If you are a person or family who relies on government assistance, under the Texas Bankruptcy Code these benefits would be exempt from seizure during the bankruptcy. In other words, your benefits would not be taken away to repay debts. Some of these benefits and assistance programs include: Cash assistance, food stamps, Medicaid, public housing, child care services, adoption, foster care services, and legal services.
Educational Savings Accounts
If you have been working towards a college fund for yourself or your child, the savings account would be protected under the Texas Bankruptcy Laws. The Law states that any money that is put into a Texas Education Savings plan will be exempt from creditors. Now here is the big "but"; if you have money in a regular savings account and claim that the account is for education, this account will not be considered exempt and your savings could be used to repay creditors. Before filing for bankruptcy be sure to consult with an attorney and secure your assets.
Other types of exemptions include Retirement Plans, Veteran Benefits, Insurance Benefits, Child Support, and Alimony. To better understand the types of exemptions that apply to your bankruptcy case, be sure to contact and consult with a qualified bankruptcy attorney. Even with every exemption that may or may not apply to your case, there are always disqualifying factors which may not help to save your personal assets.
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