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What is exempt from bankruptcy?

Getting caught in an endless cycle of debt collector calls and mailings may overwhelm you. When you do not make enough to pay bills, bankruptcy may help.

In Texas, bankruptcy does not require you to give up all your possessions. You have the right to keep property depending on the bankruptcy type. Discover how you may retain items and property while rebooting your finances.

What does an exemption mean?

When you file for bankruptcy, the court appoints a trustee who reviews your debts and assets. Once the valuation is complete, the trustee may find things to liquidate. However, under both federal and state laws, some property and assets are exempt or free from liquidation.

What qualifies as an exemption?

Your situation dictates exactly what property remains exempt. There are usually a few items that you can retain regardless. The first is your home. Texas has one of the most generous homestead exemption laws in the country. You do not have to sell your home, even if the equity is greater than the mortgage. Other items you may retain include:

  • Your cars
  • Your furniture, jewelry and other personal property worth less than $50,000
  • Your retirement fund

What differs between Chapters 7 and 13?

Exemptions may become more important if you file under Chapter 7, known as liquidation bankruptcy, under which the trustee sells qualified property to repay debt. Chapter 13 involves retooling debt to create a payment plan that allows you to keep much of your property if you can make the monthly payments.

Bankruptcy may provide you with a fresh start after a financial disaster. Finding someone who can help you work out what options work better for your overall picture may prove critical to getting out from under debt.


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