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What are Bankruptcy Exemptions?

  • October 1, 2020
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There is a set of laws that protects your property. If your property is exempt, it cannot be sold to benefit your creditors.

Most Chapter 7 Bankruptcy Cases are considered “no-asset cases,” meaning that the bankruptcy filers’ assets and property are fully protected.

Which set of Bankruptcy Exemption laws applies to you?

There are typically two sets of Bankruptcy Exemptions that could apply to you.

1) The Federal Exemptions

2) The state law exemptions of where you reside.

You have to look to your place of residence laws to see which set of exemptions applies to you. For example, if you have resided in Texas for the past five years, the Texas Exemption Laws apply to you. It’s also possible that you have not lived long enough in your current state of residence to use that state’s exemption laws. In that event, you will probably end up using Federal Exemption Laws.

Depending on your assets and property’s value, it may not matter which set of exemptions apply to your case. However, in scenarios where you have a considerable amount of assets, benefitting from using the most generous set of exemption laws can yield significant benefits. For example, the State of Texas offers generous exemption amounts to its residents. Of course, every situation is different, and Texas Exemption Laws do not protect everything. Still, they are generous compared to many other state’s exemption laws.

What are the bankruptcy exemptions under Texas law?

Under Texas exemption laws, equity in personal property is exempted up to $50,000 for a single person or $100,000 for a family.

Exempted personal property includes the following:

  • home furnishings, including family heirlooms;
  • provisions for consumption;
  • electronics (including computers, tablets, cell phones, TVs, and audio, video, or gaming equipment);
  • silverware and kitchenware;
  • furs and clothes;
  • jewelry (not to exceed 25 percent of the aggregate limitations);
  • works of art and other miscellaneous items;
  • vehicles;
  • Tools of Trade;
  • sporting equipment and bicycles;
  • two firearms;
  • horses and livestock, and
  • some qualified retirement benefits

Under Texas Exemption Laws relating to real property, the debtor’s primary residence is fully exempt. Yes, you read correctly! Subject to some limitations, your primary residence’s full value is exempt under Texas Exemption Laws.

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