Contrary to popular belief, the court won’t liquidate all of your possessions in bankruptcy
The non-essential property is considered fair game and what the court determines is and is not essential is largely determined by how you list your exemptions. Here’s what you need to know about federal bankruptcy exemptions.
All states offer what is called a homestead exemption under federal law to claim an exemption on your home and property, typically only up to a certain value. However, Texas has one of the most generous homestead exemptions in the country. Residents can exempt the entire value of the property, provided that it doesn’t exceed 10 acres in a town or city, or 100 acres outside of town.
Exemptions for Insurance or Lawsuit Settlements
Many states have what are called “wildcard exemptions,” or exemptions up to a certain value that can be applied to any asset of the debtors choosing. Texas doesn’t have a wildcard exemption because its homestead exemption is so robust, however, if a debtor chooses to use federal bankruptcy guidelines, they may be able to claim a wildcard exemption. If some of your assets aren’t covered under the homestead exemption, you may want to consider this.
Personal Property Exemptions
In Texas, you can choose to use the state bankruptcy guidelines or federal guidelines. Most of the time, state exemptions are better with the exception of a few cases. In Texas, you can claim up to two firearms, athletic equipment, religious texts, heirlooms, home furnishings, jewelry, pets and farm animals, health savings, and burial plots. Your personal property exemptions cannot exceed $50,000 as an individual or $100,000 as a family. Federal personal property exemptions, on the other hand, total a maximum of about $40,000 for an individual.
Other federal and exemptions include:
- Retirement benefits or pensions, such as a 401(k) or IRA
- Social security benefits
- Unemployment benefits
- Veteran’s benefits
- Spousal support
- Child support
- Life insurance benefits paid to you as a beneficiary
- Personal injury settlement funds
Filing for Bankruptcy? Contact a Texas Bankruptcy Attorney Now
If you’re considering filing for bankruptcy, it’s important that you have the guidance of an experienced lawyer who can help you properly file for exemptions in a way that protects as many of your assets as possible. Your attorney can help you determine if you should use Texas or federal bankruptcy guidelines. Contact Sims Bankruptcy Law today for a consultation at 254-304-7161.