Which Assets Are Exempt in a Chapter 7 Texas Bankruptcy Case?

 Posted on March 24, 2023 in Chapter 7

One of the primary reasons why many individuals are hesitant to file for bankruptcy is that they have heard that benefitting from the bankruptcy process will result in the loss of all of their personal property. This myth is likely grounded in the fact that Chapter 7 bankruptcy is referred to as “liquidation” bankruptcy.

It is important to understand that this nickname is misleading when it comes to personal bankruptcy. Companies that file for business bankruptcy must generally liquidate their assets in order to benefit from the protection afforded by the court. However, very few individuals who file for personal bankruptcy under Chapter 7 of the U.S. Bankruptcy Code lose any of their personal property as a result of the process. Instead, their property is generally protected from sale by the trustee assigned to their case via state or federal exemptions.

Exemptions: The Basics

Exemptions insulate specific property from the risk of being sold by the trustee assigned to one’s bankruptcy case. Both the state and federal schemes offer broad exemptions that cover virtually all non-luxury property that most low-income Chapter 7 filers tend to own. As a result, it has been widely reported that approximately 95% of all Chapter 7 filers do not have any of their property sold as part of the bankruptcy process.

Texas Exemptions

The state of Texas offers some of the most generous exemption opportunities in the nation. These exemptions include:

• The total amount of equity in a filer’s primary residence
• Personal property valuing up to $50,000 for individual filers
• Personal property valuing up to $100,000 for married couples filing jointly
• The total value of one car or truck for each licensed member of the filing household
• Most financial assets and benefits related to retirement, public assistance, insurance, and lawsuit-based compensation

Federal Exemptions

Although many states require Chapter 7 filers to adhere to their state-specific exemption scheme, Texas allows filers to take advantage of the federal exemption scheme if they prefer this alternative. Although the Texas exemptions are more generous than the federal exemptions for the most part, the federal exemption option offers a “wildcard” opportunity to protect assets that do not belong in other categories. This difference makes the federal exemption option more attractive to some filers in Texas.

Contact a San Antonio Chapter 7 Bankruptcy Lawyer Today for More Information

If you are concerned about losing any of your property as a result of a Chapter 7 bankruptcy filing, do not hesitate to reach out to our knowledgeable San Antonio, TX bankruptcy lawyer at Law Offices of Chance M. McGhee for assistance. By clarifying how your assets could be impacted by a bankruptcy case, you will be empowered to make informed decisions about your debt relief options.

Our firm is proud to offer confidential, risk-free case evaluation sessions at no cost. To gain greater clarity about your legal options, get started by scheduling yours today. You can reach out via the contact page on our website or by calling our office at 210-342-3400. We look forward to speaking with you.

Source:

https://upsolve.org/learn/tx-exemptions/