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Texas Banktrupty Exemptions

Date post: 18-Jul-2015
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Chapter 7 Bankruptcy

Texas Bankruptcy ExemptionsA Basic Guide1Bankruptcy Misconceptions2In 2012 there were 1.2 million bankruptcy petitions filed across the United States.3People who could benefit from bankruptcy are often hesitant to pursue that option because of misconceptions.4For example, people often believe they will lose their home, vehicle, or wages IF THEY FILE BANKRUPTCY.5In reality, most people who file bankruptcy in Texas dont lose any assets because of the GENEROUS TEXAS AND FEDERAL BANKRUPTCY EXEMPTIONS.6Choosing a Chapter7Individuals can file chapter 7, 11, 12, or 13 bankruptcy cases.8Chapter 11 is usually used by small Businesses, but can be used by individuals with large or complicated financial matters.a9Chapter 12 is filed by family farmers and fishermen to reorganize their businesses.b10Chapter 13 is filed by individuals who elect to have their wages garnished for 3 to 5 years to repay their creditors.c11Most individuals can and should to file choose a chapter 7 bankruptcy case.12

Chapter 7 The Quickest Way to A Fresh Start13For almost all individuals filing bankruptcy in Texas, the bankruptcy and federal exemptions protect most, if not all, of their assets while allowing them to be discharged from virtually all of their debts. 14Who Has Jurisdiction Over Bankruptcy Cases?15Bankruptcy is federal law, meaning that the federal courts have jurisdiction over bankruptcy proceedings in the U.S. 16Although bankruptcy is federal law, each state determines the exemptions debtors may use when filing bankruptcy. 17A debtor can use the states exemptions if he or she lived in that state for the two years before the bankruptcy case is filed.Determining Exemptions18If you lived in Texas for the two years prior to the filing of your bankruptcy case, you can use either the state or federal exemptions both allow most debtors to keep virtually all of their assets.19What is an Exemption?Think of an exemption as a way to legally protect an asset from seizure by the bankruptcy trustee for the purpose of satisfying creditor claims.20An exempt asset is an asset you can keep when you file a bankruptcy case.21Federal vs. State ExemptionsThe U.S. Bankruptcy Code provides a list of federal exemptions. Individual states are also allowed to create their own list of exemptions.22Furthermore, each state determines if a debtor must use the states exemptions or has the option to choose the federal exemptions instead.23Texas allows a debtor to use either the federal or state exemptions BUT NOT BOTH24 A married debtor filing a joint petition may double many of the exemptions, EITHER FEDERAL OR STATE.25Texas ExemptionsTexas has some of the most liberal exemptions of all the states.26A few commonly used exemptions include:Homestead Texas has an unlimited homestead exemption that allows a debtor to exempt a residence and up to 10 acres if the debtor lives in the city or a residence and up to 100 to 200 acres if the debtor lives in the country.Vehicle full value of one motor vehicle per licensed household member. If a household member is unlicensed, you may still be able to exempt a vehicle for that individual if he or she relies on someone else to operate the vehicle for the individual. Additional vehicles allowed if used in trade or business.Livestock pets, two horses/mules/donkeys plus tack, 12 head of cattle, 60 head of other livestock, 120 fowl.27Personal Property up to $60,000 if you have a family; $30,000 if you are single without a familyRetirement/Pensions federal law exempts most tax-exempt pension and retirement accounts even if you elect to use the Texas exemptions. Texas law also exempts other accountsInsurance Benefits all life, health and accident benefits are exempt28Federal Exemptions291Homestead up to $22,975 in equity in your home(doubled if married plus wildcard)2Vehicle up to $3,675 in equity in one motor vehicle3Personal Property household good up to an aggregate value of $12,250 but no more than $575 for any one item4Retirement Accounts all tax-exempt retirement accounts up to a cap of $1,245,475 on IRAs and Roth IRAs5Wildcard -- $1,225 plus up to $11,500 of the unused portion of your homestead exemption for any other property30Exemptions and Secured DebtAn exemption will protect your property from being sold to repay creditors but you still have to pay the purchase money lender who financed the purchase of your car or home if you want to keep that asset.31For instance:Your homes current market value is $200,000 and you owe $100,000 on the loan.

32For instance:Your homes current market value is $200,000 and you owe $100,000 on the loan.The Texas homestead exemption will protect the $100,000 of equity you have in the home.33For instance:Your homes current market value is $200,000 and you owe $100,000 on the loan.The Texas homestead exemption will protect the $100,000 of equity you have in the home.However, if you want to keep your home, you must still pay the purchase money lender. Claiming the home as exempt does not remove the purchase money lenders lien on your home. 34

Want to Know More About Bankruptcy Exemptions in Texas?35

Get Your Bankruptcy Exemptions AnsweredClick to visit: centraltexasbankruptcy.comContent provided by Best Legal Practices36