Part of the
bankruptcy process for
Chapter 7 involves protecting your estate assets from creditor collection. In
Chapter 13 bankruptcy filings, the value of the bankruptcy estate is minimized to
reduce how much money will ultimately be paid back to creditors over the
course of a few years. In both processes, what can be protected or reduced
are known as bankruptcy exemptions.
Texas State Bankruptcy Exemptions vs. Federal Bankruptcy Exemptions
If you live in Texas, when you go to claim or protect bankruptcy exemptions,
you actually have a choice to make: use state-level bankruptcy exemptions,
or use federal bankruptcy exemptions. You cannot choose to use both. The
concept of both Texas and federal exemptions are the same, which is holding
onto your property even after you go bankrupt. The differences you must
consider are in the fine print.
Some exemptions you will want to compare include:
Texas: Protect up to 10 acres of land in a city, town, or village, regardless
of value; protect up to 100 acres of land in the country (200 if you have
a family), regardless of value; first six months’ worth of proceeds
from selling your home are exempt.
Federal: Protects $23,675 worth of equity in your primary place of residence.
Motor vehicle exemption:
Texas: Protect one motor vehicle per licensed household member, regardless of
the vehicle’s value.
Federal: Protect up to $3,775 worth of your motor vehicle’s value.
Personal property exemption:
Texas: Protect personal property valued up to $50,000 ($100,000 if you are the
head of a family), including but not limited to sporting equipment, up
to two firearms, clothing, furniture, pets, burial plots, health savings
accounts, etc.; religious scripts are not subject to the property cap;
jewelry cannot exceed 25% of total personal property exemption; and multitudes
Federal: $1,600 worth of jewelry; $2,375 worth of tools-of-the-trade pertaining
to your occupation; $12,625 worth of random items – furniture, clothing,
entertainment items, etc. – with no one item being worth more than
$600; health aids and $12,625 in loan value; additional $1,250 worth of
wildcard property – items of your choosing – plus up to $11,850
of unused exemptions originally designated for your homestead.
With just a cursory, simplified glance, it is clear that choosing the right
set of exemptions, either Texas or federal, can be difficult. The lists
go on and you must compare them carefully to ensure you end up keeping
as much as possible, or repaying as little as can be. If you need help
sorting through this information and making the right choice,
contact Maida Law Firm, P.C. and our Houston bankruptcy attorneys. (We also have
an office in Beaumont.)