Texas Bankruptcy Exemptions

Many people fear the bankruptcy process because of concerns over asset liquidation. If you are filing a Texas bankruptcy, you should be comforted by the fact that our state has some of the most generous exemptions that can offer far more protection of your property than under federal exemption laws. Here is an explanation of the different types of property and assets that can be protected under Texas bankruptcy exemption laws:

The Homestead Exemption

The homestead exemption is one of the most important in most bankruptcy cases. People looking to protect their  homes should be pleased by the fact that Texas is one of very few states that offer an unlimited dollar amount of equity to be exempt from a bankruptcy liquidation. This means that, if eligible, your home could be fully protected under Texas laws. To be eligible, you must have resided in the state of Texas for at least 2 years, and the home must be less than 10 acres if located within the city or 100 acres (200 acres for a family) outside city limits.

Personal Property

For a single person filing Texas bankruptcy, a value of $30,000 worth of personal property articles can be claimed as exempt; $60,000 for a family. The personal property exemptions includes items like home furnishings, clothing, tools, and sporting equipment. The exemption of jewelry is capped at a maximum value of 25% of the $30,000 or $60,000. Exemption laws allow for one vehicle per licensed member of the household. Farming vehicles and equipment can also be included under the personal property exemption, as well as tools of the trade needed to sustain a living.

Health Aids and Benefits

Equipment that is prescribed by a doctor for assistance in daily living and care are claimed as exempt under the health aids exemption. Benefits such as social security disability income and supplemental security income are, generally, both protected in a Texas bankruptcy filing.

Insurance Policies

Life insurance policies of an unlimited value can be protected under bankruptcy exemption laws if a dependent or family member is named the beneficiary. These policies include, but are not limited to, life/health/accident/annuity benefits, fraternal benefit society benefits, Texas public school employee’s group benefits, Texas college, and state university employee benefits.

Retirement Plans

The funds in a retirement plan can be exempt to an unlimited amount in certain qualified accounts. Accounts that may be eligible are those that are tax-deferred plans originated by an employer, such as 401(k), 403(b)s, profit sharing plans, and some IRAs.

Military Exemptions

The exemption laws offer military service member’s homestead protection in a bankruptcy. Military insurance benefits, survivor benefits and active duty wages are also protected under Texas bankruptcy exemption laws.¬† Generally, the court will halt any garnishment or collection orders while a member is serving in active duty. Veterans pay also have their wages, benefits and insurance exempt unless priority, non-dischargeable needs need to be satisfied.