One of the most common questions Texas bankruptcy filers ask is, “How can I protect myself in a Texas bankruptcy and keep my home?” The good news is bankruptcy laws protect certain property regardless of whether you file a Chapter 7 or Chapter 13 Texas bankruptcy.
If you decide to file a Texas bankruptcy the court will appoint a trustee who will determine what property is part of your estate. Your estate will include all property you own. Under federal and state bankruptcy laws, however, certain assets are protected through exemptions and can be removed from your bankruptcy estate.
Bankruptcy exemptions in a Texas bankruptcy
Unfortunately, bankruptcy exemptions can be a bit complicated. For instance, federal bankruptcy laws outline a list of property which can be exempt, but states have also created their own exemptions. Some states require bankruptcy filers to choose state bankruptcy exemptions while others allow filers to choose federal or state exemptions. If you a file Texas bankruptcy you have a choice. You may choose to use the state or the federal bankruptcy list. You cannot, however, pick and choose from both lists.
Can I save my home in a Texas bankruptcy?
Texas bankruptcy exemptions are among the most generous in the country. For this reason, most Texas bankruptcy filers will choose to use the state bankruptcy exemptions. Under Texas bankruptcy exemption laws a filer is allowed an unlimited homestead exemption for a residence on 10 acres or less in a city, town or village or 100 acres or less in the country. This means if you decide to file Chapter 7 bankruptcy you will be allowed to keep your primary residence regardless of its value.
There is a caveat, however. Texas bankruptcy laws require debtors to have lived in the state of Texas for at least 40 months before they are allowed to claim any homestead protection greater than $146,450. The law was updated to eliminate the practice of debtors moving to Texas simply to protect more of their property in a bankruptcy filing. So if you have recently moved to Texas and now are considering filing bankruptcy, most likely you will be required to utilize the laws of your previous home state and will not be allowed to take advantage of the generous Texas state homestead exemption.
Due to the complexity of bankruptcy law if you are considering filing Chapter 7 or Chapter 13 bankruptcy in Texas you might need to discuss your case with a bankruptcy lawyer. More information about Texas bankruptcy exemptions, specifically Texas’s homestead exemption, can be found in Chapter 41 of the Texas Property Code at §§ 41.001 – 41.024.
Can I file Chapter 7 bankruptcy if I own a home?
If you own a home you may be allowed to file Chapter 7 bankruptcy, but bankruptcy laws have made it more difficult for many filers with higher incomes to qualify. If your income in Texas is higher than the state’s median income you may be required to file Chapter 13 bankruptcy and repay a portion of your debts over 3 or 5 years.
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