Bankruptcy promotes a fresh start while giving creditors partial satisfaction through sale of the debtor’s assets or partial repayment of debt over time. In that spirit of forgiveness, bankruptcy law allows debtors to preserve certain assets due to their essential or sentimental value to the debtor. Exemption means protecting specified assets from being sold off for the benefit of creditors (as in Chapter 7) or paid off in order to be retained by the debtor (as in Chapter 13). At the Law Offices of Cheryl S. Davis, P.C. in El Paso, I have more than 20 years of experience advising debtors on available exemptions under federal and state law and on how to use them to full advantage.
Both federal and Texas state law have their own bankruptcy exemptions, but you must choose either the federal or state options, not both. Most debtors choose Texas state exemptions because they are far more generous.
The Texas homestead exemption allows you to exempt a certain acreage that you use as your residence:
Full exemptions are granted for certain personal property, namely:
Exemptions for the following property are limited to either $50,000 for a single person or $100,000 for a family:
Texas further makes exemptions for certain insurance and retirement benefits, which include life, health, accident, or annuity benefits, fraternal benefit society benefits and state employees’ benefits.
Unlike federal law, Texas does not have a wildcard exemption that can be used to protect property of your choosing. Texas also does not exempt lawsuit proceeds.
Federal law places limits on the value of most categories of exempt property. For instance, the homestead exemption is limited to $25,150 and the motor vehicle exemption to $4,000. However, federal law has some exemptions not available under Texas law, including:
I conduct a complete analysis of your assets and debt portfolio and can advise you whether you might benefit more from choosing the federal exemptions or those under Texas law.
The Law Offices of Cheryl S. Davis, P.C. advises clients in Texas on the full range of bankruptcy matters. Please call 915-320-6226 or contact me online to schedule an appointment in my El Paso office.