When you file for bankruptcy, the state gives debtors the opportunity to keep certain assets. Exemption laws are to keep some of your property from being collected by creditors. What are these assets? Exempt property are things that you’ll need in order to maintain your job and household. This varies by state and you get to choose between state and federal bankruptcy exemptions. However, since Texas bankruptcy exemptions are one of the most generous, in most cases it’s more beneficial to use them instead of the federal exemptions.
There is also property you can’t keep, nonexempt property. In a Chapter 7 bankruptcy, property will be sold to pay creditors and in a Chapter 13, you’ll keep everything but pay the value of said property, nondischargeable debt, and disposable income through the repayment plan.
Texas Bankruptcy Exemptions
Homestead: Texas offers unlimited homestead exemption except by the amount of acres and based on the location of the property. If your residence is on 10 acres or less in a city, town or village you’ll get unlimited homestead exemption. This is also the case if your residence is on 100 acres of less in the country or 200 acres if you have a family. If you sell your house, the proceeds are exempt for six months after the sale.
Personal Property: Your personal property can be exempt if it doesn’t exceed a total of $100,000 or $50,000 if you’re a single adult without a family. This means that if all your personal property is over $100,000 and you’re the head of the family you won’t keep all of your property. On the other hand, a single adult’s exempt personal property can’t surpass $50,000. Personal property includes sporting equipment, up to two firearms, some jewelry, home furnishings including family heirlooms, several animals, food, clothing, and sacred books.
Vehicle: The law allows you to exempt the entire value of one motor vehicle per licensed household member. If you have a family member who doesn’t have a license, the vehicle can still be exempt if the unlicensed person relies on someone else to drive the vehicle.
Wages: Wages are exempt for personal services, except for the enforcement of court-ordered child support payments.
Pension/Retirement: A majority of tax-exempt pensions and retirement accounts are exempt, even if you choose the Texas exemptions instead of federal ones. These pensions and accounts include particular pensions or retirement funds that receive special tax exemptions under the U.S. Tax Code.