If you are like many Americans, even considering bankruptcy may feel like admitting failure. Worse, you may worry that filing for bankruptcy will mean losing valuable personal property, retirement savings or even your home.
However, in Texas, you may be able to keep most or even all your property after bankruptcy by using state exemptions. These exemptions allow you to protect certain types of property from creditors when filing for either Chapter 7 or Chapter 13 bankruptcy. However, certain limits apply to each type of exemption.
Texas homestead exemption
Texas has an unlimited homestead exemption, meaning that you may be able to keep the entirety of your home equity after filing for bankruptcy. Additionally, if you sell your home, proceeds remain exempt from creditor claims for 6 months after sale.
Texas personal property exemptions
If you are applying as a single person, exemptions protect up to $50,000 of your personal property. If applying as a family, up to $100,000 may be exempt. Personal belongings that have protection during bankruptcy include:
- Home furnishings, including heirlooms
- Motor vehicles
- Professional trade tools
However, certain limits apply to each type of property.
Texas retirement savings exemptions
If you have money in a tax-exempt retirement account, those savings are likely also exempt during bankruptcy. This includes retirement plans through a private employer, public entity or church.
In Texas, you have the option of using either state or federal bankruptcy exemptions. However, you may only choose from one set of exemptions. Before filing, consider carefully which choice offers the most protection for you and your family.