When you’re facing bankruptcy in Texas, you may wonder how much – if any – of your property you may be able to keep. The answer depends on your individual case and the laws of your state.
In a bankruptcy, much of a person’s property may become property of the bankruptcy estate and used to pay off creditors and to pay the fees associated with the bankruptcy process. In a chapter 7 bankruptcy, this is accomplished by liquidating assets to pay creditors. In chapter 13 bankruptcy, you keep your property but must work out a repayment plan.
This doesn’t mean, however, that in chapter 7 bankruptcy you must to have every single thing you own put into your bankruptcy estate to be liquidated; certain property may be exempt up to a certain dollar amount. Exemptions are rules that allow the individual filing for bankruptcy to keep certain assets, rather than having these assets become property of the bankruptcy estate. In chapter 13 bankruptcy, exemptions may help lower payments to unsecured creditors, as you will pay unsecured creditors for the portion of the property that is not exempt.
What can exemptions be used for?
Federal bankruptcy guidelines allow certain exemptions on property, while state laws have their own rules and regulations attached to exemptions. In Texas, you can choose whether you want to apply federal or state exemption rules to your case, as you cannot use both.
In Texas, there are exemptions for properties, vehicles, livestock, pensions, household items and more. Married couples filing for bankruptcy jointly may take advantage of exemptions individually, doubling the exemption amount for any property that is jointly owned.
Bankruptcy can be a fairly complicated process, and can be confusing for the average person, especially when under the stress of financial troubles. If you have questions about which exemptions apply to you, or about any other part of the bankruptcy process, speak with an attorney who has experience in handling bankruptcy cases.