Filing for bankruptcy is often considered to be a taboo. You need to open your mind to realize that it is one of the best options to manage your finances, especially if you are struggling with large debts. The government provides various exemptions to debtors when they file for bankruptcy. Call 888-297-6023 to know more about these exemptions and how you can benefit from them.
Apart from federal bankruptcy exemptions, every state has its own list of exemptions which protect a large portion of bankruptcy filer’s property. When you file for bankruptcy, everything you own becomes a part of the bankruptcy estate, from which you can keep certain exempt property without paying anything. According to Dallas based bankruptcy law firm, Recovery Law Group, some states offer you a choice between federal and state set of exemptions, while others allow you to choose from the state exemption sets only. Though the state of Texas offers you a choice between state and federal exemptions, the state exemptions are plentiful. What’s more, if any asset is not covered by Texas exemption, you can opt for wildcard exemption of federal bankruptcy scheme. A married couple filing for a joint bankruptcy can double the exemption for any joint property they own!
Here’s a look at various Texas bankruptcy exemptions:
- Texas homestead exemptions
The unlimited homestead exemption is available for 10 acres or less area residence in village, town or city or 100 acres or less in the country. For married couples, this exemption doubles! In case you sell your house, the proceeds are exempted for 6 months after sale under this exemption.
- Texas motor vehicle exemptions
The entire value of one motor vehicle per licensed household member is available as per this exemption. In case there is an unlicensed person who depends on someone else to drive him/her around, you can still get the vehicle exempted.
- Texas personal property exemptions
Personal property except real estate exemptions cannot exceed $100,000 ($50,000 in case of a single adult, without family). in case your personal property exceeds the exemption limit, that much amount will become non-exempt. This includes:
- Sports and athletic equipment including bicycles;
- Home furnishings including family heirlooms;
- Jewelry (with an upper limit of 25% of total exemption, i.e. $25,000 in case of family and $12,500 in case of individual filer);
- Food and clothing;
- Up to 2 firearms;
- Animals, including pet and domestic, plus their food. You are allowed two mules, donkeys, or horses plus tack, 12 head of cattle, 60 head of livestock and 120 fowl;
- Health saving accounts;
- Health aids like walking sticks, wheelchairs, hearing aids, ;
- Burial plots;
- Bible or any other sacred book (not subjected to $100,000/$50,000 limits).
- Pension and retirement accounts
Most pension and retirement accounts are exempted in both state and federal exemptions. Texas state also provides exemptions to the following pension and retirement accounts:
- ERISA-qualifies government or church benefits. This includes IRAs, Keoghs and Roth IRAs.
- County and district employee retirement and pension benefits.
- Firefighter pension and retirement benefits.
- Law enforcement officers, emergency medical personnel survivors’ benefit.
- Police officer retirement and pension benefits.
- Judges pension and retirement benefits.
- Municipal employees, state employees and elected officials’ retirement and pension benefits.
- Teacher retirement and pension benefits.
- Retirement benefits which end up being tax-deferred.
- Insurance exemptions
These include:
- Life, accident, health insurance or annuity benefits such as money, policy profits or cash value due or paid to the beneficiary;
- Texas employee uniform group insurance;
- Fraternal benefit society benefits (e.g. from Freemasons, Elks, Knights of Columbus, );
- Texas public school employees’ group insurance;
- Texas state college or university employee benefits.
However, Texas does not offer any exemption against lawsuit proceeds. It also lacks a wildcard exemption through which you can protect any property as per your wish. The silver lining is that such a provision is available in federal exemption set, through which you can protect a portion of such funds. In case you have a pending lawsuit or an injury claim under process in court, it becomes part of your bankruptcy estate. If it appears to be of value, the bankruptcy trustee Dallas might hire a lawyer to litigate it. It is important to, therefore, check exemptions before filing for bankruptcy.