People considering filing bankruptcy to help solve their financial problems often want to know which property or possessions they will lose and which they will be able to keep when they file. The answer depends on which type of bankruptcy is filed. In a Chapter 13, you get to keep everything, but you are required to pay all or a portion of your debts out through a payment plan. In a Chapter 7, you must turn all of your property over to the bankruptcy Trustee other than the items that are exempt according to bankruptcy law. By looking at the bankruptcy law exemptions, you can decide what you will be allowed to keep.
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In Texas, the debtor is allowed to use either the Federal Bankruptcy Law Exemptions or the Texas Law Exemptions, but you can not mix and match. You must choose one set of laws or the other. Texas laws allow more exemptions for the debtor in most cases, so the discussion below will cover the Texas Law exemptions.
Homestead Exemption: Under Texas Bankruptcy Code, there is no limit to the amount of value in that is exempt in the debtors homestead. The size limitation of a homestead if it is located in a city, town or village is that property cannot exceed 1 acre. For property located outside of a city, town or village, is limited is 100 acres for and individual or 200 acres for a family. In order to be eligible for this exemption, you must have lived in Texas for 2 years and have purchased the property at least 1215 days (3.3 years) before the date of filing.
Personal Property Exemptions: In Texas, a single debtor can keep up to $30,000 of personal property and a family can keep up to $60,000 of personal property. The property the debtor owns is valued at resale (or garage sale) prices. The personal property that is included that can add up to the above amounts can consist of the following:
1. Home furnishings- This includes sofas, dining room tables, beds, etc.
2. Clothing- This includes anything you wear on your body with the exception of jewelry and minks. Jewelry is also exempt to a certain extent. The debtor can keep there jewelry which adds up to 25% of the exemption. For example, a single debtor can keep only up to $7,500 worth of their jewelry.
3. Firearms- Two firearms can be exempt.
4. Athletic/Sporting Equipment- This includes bicycles, training equipment, treadmills, tennis rackets, etc. In order for it to qualify for this exemption is must be for individual use. For example, a sailboat does not qualify as sporting equipment under the exemption.
5. Motor Vehicles- A motor vehicle with 2, 3, or 4 wheels can be exempt for each member of the family who has a drivers license or who does not have a driver's license and depends on someone else for transportation.
6. Wages- Wages are exempt under Texas Bankruptcy law unless they are being seized for child-support payment. Also if the debtor is self-employed, he can only claim up to 25% of the total exemption in wages. Under this rule, unpaid commissions are also only exempt up to 25% of the total exemption.
7. Others- Besides the categories listed above farm equipment, tools of the trade, household pets, some farm animals, health aids, certain life insurance policies, food, and farming and ranching vehicles.
Other Property Exemptions: In addition to the homestead and property exemptions above, there are additional and more complicated exemptions that may be available to the debtor. Some of the exemptions are the Retirement Plan Exemption, Veteran's Exemption, Insurance Benefits Exemption, Texas Public Benefits Exemptions, Child Support and Alimony Exemptions, among others.
Bankruptcy exemption law is a very complicated portion of bankruptcy law. To understand which bankruptcy exemptions will be available to you when filing, you should contact an experienced bankruptcy attorney.
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