New Texas Law May Help Debtors Exempt Assets From Seizure by Creditors

 Posted on January 13, 2023 in Bankruptcy

New laws are passed regularly, and in many cases, they go into effect on the first day of the following year. However, keeping up with changes to the law can be difficult, especially for members of the general public who are not well-versed in legal issues. It can be important to be aware of these changes, because they can affect people's lives in many ways. One Texas law that took effect on January 1, 2023 may play a role in cases involving bankruptcy or other debt-related issues. This law gives debtors more options for preventing creditors from seizing their assets following a legal judgment.

New Procedures for Claiming Exemptions to the Seizure of Personal Property by Creditors

HB 3774 made a number of changes to the justice system in Texas, but one of the most important changes involved the rules that will be followed when debtors assert exemptions to asset seizure. This may be an issue in cases where creditors pursue lawsuits against debtors in an attempt to recover unpaid debts. After a creditor obtains a judgment against a debtor, they may then take action to seize the debtor's assets, including funds in bank accounts, vehicles, or other personal property. However, certain assets are exempt from seizure under the law, and HB 3774 required the Texas Supreme Court to implement new rules that will allow debtors to claim these exemptions and prevent the loss of their property.

Under the Supreme Court's rules, creditors are required to provide debtors with a Seizure Exemption Notice, a Seizure Exemption Claim Form, and a document with instructions for the Seizure Exemption Claim Form. These documents must be served to the debtor within three days after property is seized by the creditor or by a receiver appointed by the court. Property cannot be sold within 14 days after the debtor received the documents or within 17 days after the seizure of property if the documents were sent by mail.

If a debtor believes that their property is exempt from seizure, they can file the Seizure Exemption Claim form. A court hearing will then be scheduled, and the creditor will be prevented from selling the seized property until the court makes a decision on the matter. If the court determines that property is exempt, it must be returned to the debtor within three days.

What Types of Assets Are Exempt?

The Seizure Exemption Notice provided to a debtor will detail the types of property that are exempt. These include:

• The wages the debtor is currently receiving for performing work or personal services

• Benefits received through the Social Security Administration, including retirement benefits, Supplemental Security Income (SSI), and Social Security Disability Insurance (SSDI)

• Benefits received through the Veterans Administration, the Railroad Retirement Board, or the Office of Personnel Management

• Other retirement or pension benefits, including funds in tax-deferred retirement accounts such as a 401(k) or IRA

• Benefits from life insurance or annuities

• Funds in health savings accounts or education savings accounts

• Unemployment or workers' compensation benefits

• Funds received through Temporary Assistance for Needy Families (TANF)

• Domestic support, including child support or spousal support

• Proceeds received from the sale of a family home

• Health aids prescribed by a medical professional

• Bibles or other religious books

• Up to $50,000 of personal property for a single person or $100,000 of property for a family, which may include food, clothing, home furniture, family heirlooms, a motor vehicle for each member of a family, work-related tools and equipment, athletic equipment, family pets, two firearms, or jewelry worth up to $12,500 for an individual or $25,000 for a family

Contact Our Fort Worth Debt Relief Attorneys

The possibility of losing property to seizure by a creditor can be a major concern for those with large debts. While some exemptions will apply, and changes to Texas law have made it easier to claim these exemptions, dealing with these issues can be difficult, especially for those who are looking to recover property that has already been seized. It is usually preferable to take action to prevent a judgment in the first place, and one of the best ways of doing so is by filing for bankruptcy. At Acker Warren P.C., our Wise County bankruptcy lawyers can guide you through bankruptcy planning and bankruptcy proceedings, helping to ensure that your debts are resolved in the most efficient manner possible. Contact us today at 817-752-9033 for a free consultation.

Sources:

https://capitol.texas.gov/tlodocs/87R/billtext/html/HB03774F.htm

https://www.txcourts.gov/media/1453292/219152.pdf