One of the first things that people want to know when they’re considering bankruptcy is what will happen to all their things. A common misconception is that they will lose everything they worked for. Some assets can be seized by the trustee overseeing the bankruptcy so they can be liquidated to pay creditors; however, the trustee may bypass this process if the assets won’t make a significant difference in the creditor balances.
The truth is that Texas offers exemptions that allow bankruptcy filers to keep certain assets as long as they meet specific requirements. Filers have to choose between the exemptions that are allowable under Texas law or those that apply under federal law. It’s not possible to mix and match these, so a firm decision must be made.
Many people look at the homestead exemption
Texas law provides for a more generous homestead exemptions than federal law allows. The state exemption provides protection for equity in a primary residence, but there are acreage limits present, based on whether the property is urban or rural.
Other exemptions under Texas law
Texas has protections in place for many other types of property, such as personal property. This includes things like tools, firearms, livestock, vehicles and other types of property. There are limits that apply to the personal property. Vehicles may also be protected, but this depends on how many members of the household are licensed.
Retirement accounts, certain government payments and specific public benefits can also be exempted from the bankruptcy process. Because exemptions can vary from one case to another, it’s critical to work with someone familiar with this process so bankruptcy filers can ensure they’re doing what’s in their best interest.