Texas Bankruptcy Exemptions

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Texas Bankruptcy Exemptions

The Texas bankruptcy exemptions chart details the property you can exempt, or protect from creditors when you file bankruptcy in Texas. You may exempt any property that falls into one of the exemptions categories below, up to the dollar amount listed. You will be able to keep this exempted property after you file bankruptcy. Please note that there are certain debts which you will not be able to erase in bankruptcy.

In Texas, you have the choice of using the federal bankruptcy exemption statutes instead of your Texas bankruptcy exemptions.

An exemption limit applies to any equity you have in the property. Equity is the difference between the value of the property and what is owed on the property. For example, a car valued at $5000 with a loan against it of $4500 has an equity value of $500.

If the property is secured by a loan, such as a car or home, and you are current on the payments at the time of the bankruptcy, and the equity is covered by your exemptions, you may elect to continue making payments on the loan and keep this property through the bankruptcy. If all of the equity is not covered by your exemptions, the trustee may elect to liquidate this asset and distribute the proceeds. Generally, in this case, you would be entitled to the value of your exemption in the asset as a cash payment.

Texas bankruptcy law allows married couples who are filing jointly to each claim a full set of exemptions unless otherwise noted.

To keep non-exempt property, a debtor must generally pay the trustee the value of the non-exempt property. When you file bankruptcy in Texas you may also use certain federal exemptions in addition to your Texas exemptions.

Texas Exemptions

Asset: Homestead
Exemption:

  • Unlimited; property cannot exceed 1 acre in town, village, city or 100 acres (200 acres for families) elsewhere; sale proceeds exempt for 6 months after sale (need not occupy if not acquire another home)
  • May file homestead declaration

Law Sections: Property 41.001, 41.002. 41.003

Asset: Personal Property

Exemption:

  • Athletic and sporting equipment, including bicycles; 2 firearms; home furnishings, including family heirlooms; food; clothing; jewelry (not to exceed 25% of total exemption); 1 two-, three- or four-wheeled motor vehicle per member of family or single adult who holds a driver’s license (or who operates vehicle for someone else who does not have a license); 2 horses, mules or donkeys and a saddle, blanket and bridle for each; 12 head of cattle; 60 head of other types of livestock; 120 fowl; and pets to $30,000 total ($60,000 for head of family)
  • Burial plots
  • Health aids

Law Sections: Property 41.001, 42.001, 42.001 (b)(2), 42.002

Asset: Insurance

Exemption:

  • Church benefit plan benefits
  • Fraternal benefit society benefits
  • Life, health, accident or annuity benefits or monies, including policy proceeds and cash values to be paid or rendered to the beneficiary or insured
  • Life insurance present value if the beneficiary is debtor or debtor’s dependent (see note under personal property)
  • Retired public school employees group insurance
  • Texas employee uniform group insurance
  • Texas state college or university employee benefits

Law Sections: 1407a-6, 885.316, Insurance 21.22, Property 42.002(a) (12), Insurance 3.50-4(11) (a),3.50-4(11),1575.006, 1551.011

Asset: Miscellaneous

Exemption:

  • Property of a business partnership

Law Sections: 6132b-25

Asset: Pensions

Exemption:

  • County & district employees
  • ERISA-qualified government or church benefits, including Keoghs and IRAs
  • Firefighters
  • IRAs to extent tax-deferred
  • Judges
  • Keoghs to extent tax-deferred
  • Law enforcement officers’ survivors
  • Municipal employees
  • Police officers
  • Retirement benefits to extent tax-deferred
  • State employees
  • Teachers

Law Sections: Government 811.005, Property 42.0021, 6243e(5), 6243e.1(12), 6243e.2(12), Property 42.0021, 6228f(8), 6243g, 6243d-1(17), 6243j(20),6243g-1(23B)

Asset: Public Benefits

Exemption:

  • Crime victims’ award
  • Medical assistance
  • Public assistance
  • Unemployment compensation
  • Workers’ compensation

Law Sections: 56.49, Hum. Res. 32.036, Hum. Res. 31.040, 5221b-13, 8308-4.07

Asset: Tools of Trade

Exemption:

  • Farming or ranching vehicles and implements
  • Tools, equipment (includes boat & motor vehicles) & books

Law Sections: Property 42.002(a) (3), Property 42.002(a) (4)

Asset: Wages

Exemption:

  • Earned but unpaid wages
  • Unpaid commissions to 75% (see personal property)

Law Sections: Property 42.001(b) (1), Property 42.001(d)

Federal Exemptions

Asset: Homestead

Exemption:

  • Real property, including co-op or mobile home, to $17,450
  • Unused portion of the homestead to $8,725 may be applied to any property

Law Sections: (11 USC § 522) (d)(1)

Asset: Insurance

Exemption:

  • Disability, illness or unemployment benefits
  • Life insurance payments for persons who depend on debtor, needed for support
  • Life insurance policy with loan value, in accrued dividends or interest, to $9,300
  • Unmatured life insurance contract, except credit insurance policy

Law Sections: (d)(10)(C)(d)11)(C)(d)(8)(d)(7)

Asset: Miscellaneous

Exemption:

  • Alimony, child support needed for support

Law Sections: (d)(10(D)

Asset: Pensions

Exemption:

  • ERISA-qualified benefits needed for support

Law Sections: (d)(10)(E)

Asset: Personal Property

Exemption:

  • Animals, crops, clothing, appliances,
    books, furnishings, household goods, musical instruments to $425
    per item, $9,300 total
  • Health aids
  • Jewelry to $1,150
  • Lost earnings payments
  • Motor vehicle to $2,775
  • Personal injury recoveries to $17,425 (not to include pain and
    suffering or pecuniary loss)
  • Wrongful death recoveries for person debtor depended on

Law Sections: (d)(3)(d)(9)(d)(4)(d)(11)(E)(d)(2)(d)(11)(D)(d)(11)(B)

Asset: Public Benefits

Exemption:

  • Crime victims’ compensation
  • Public assistance
  • Social Security
  • Unemployment compensation
  • Veterans’ benefits

Law Sections: (d)(11)(A)(d)(10)(A)(d)(10)(A)(d)(10)(A)(d)(10)(A)

Asset: Tools of Trade

Exemption:

  • Implements
  • Books & tools of trade to $1,750

Law Sections: (d)(6)

Asset: Wild Card

Exemption:

  • $925 of any property up to $8,725 of unused homestead exemption, for any property

Law Sections: (d)(5)(d)(5)

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Cloud Title On Homestead

You must have a clear title when refinancing or selling a home, which is why an abstract of judgment is problematic. The judgment lien creates a title defect or a cloud on the title. This means that there is an unresolved issue that must be addressed before making any real estate transactions. Title companies enforce the lien as a way to protect themselves in case the home isn’t eligible for homestead exemption because it’s not your primary residence. If a title company allows the transaction to proceed and the property isn’t your homestead, it has to pay the judgment. Fortunately, a Texas judgment lien release lawyer can remedy this issue.

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Getting A Full Release

In some instances, you have to get a full judgment lien release. This completely releases the judgment, so it isn’t attached to you or your property. There are normally two options for obtaining a full release. First, you can pay the judgment in full. If you don’t have the means to do that, your Texas judgment lien release attorney might be able to negotiate a settlement. If the creditor accepts the settlement, you will receive a full release once it’s paid. Without taking action, the judgment will remain valid for 10 years. It’s important to contact a judgment lien release attorney to go over your options if you need a full release.

Proof Of Homestead

Judgment creditors often require proof of homestead before signing a partial lien release. Your Texas judgment lien release attorney will help you provide the necessary documents. You might need to submit an affidavit that states that the property is your homestead. The creditor also might require a tax certificate that proves you’ve filed for homestead exemption. In addition, the creditor might ask for affidavits from others that state that the property is your homestead, and you live there. In some cases, the creditor can even require the escrow agent to examine the property to ensure it’s your homestead. Due to the complexity of proving homestead, it’s a good idea to get help from a Texas judgment lien release attorney.

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