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Texas Bankruptcy Exemptions Compared to Federal Exemptions

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:

  • Homestead exemption:
    • 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 of cattle.
    • 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.)



This post first appeared on Beaumont Bankruptcy Blog | Houston Bankruptcy Lawy, please read the originial post: here

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Texas Bankruptcy Exemptions Compared to Federal Exemptions

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