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Using Exemptions to Protect Your Assets During Bankruptcy

Posted on in Bankruptcy

Using Exemptions to Protect Your Assets During BankruptcyPeople who file for bankruptcy have several exemptions at their disposal to protect their properties from seizure by creditors. Texas residents can use either the federal property exemptions or the Texas property exemptions, but not both. Many residents choose the Texas exemptions because they are considered more favorable. With Texas’ property exemptions, bankruptcy filers may be able to keep valuable assets, such as their homes and vehicles.


Texas’ Homestead Exemption provides broad protection for the primary residence of a person filing for bankruptcy. A home of any value may qualify, as long as the property is:

  • Less than 10 acres in a city, town or village;
  • Less than 100 acres for an individual in a rural area; or
  • Less than 200 acres for a family in a rural area.

However, the exemption does not absolve property owners from mortgage payments. If the owner is unable to keep up with the payments, the mortgage holder has the right to pursue foreclosure.

Motor Vehicles

A person with a valid driver’s license can exempt one motor vehicle from seizure during bankruptcy. For families, this means each licensed driver can keep his or her own vehicle. A person without a driver’s license can also exempt a vehicle if he or she relies on someone else to transport him or her in it. However, a vehicle is subject to seizure if the owner cannot keep up with loan payments.

Personal Property

Most other possessions fall into the category of personal property. Texas allows individuals to exempt personal properties that have a combined value of as much as $50,000. The exemption is $100,000 for married couples. Certain properties are automatically exempt and not counted towards the monetary exemption, including:

  • Home furnishings;
  • Family heirlooms;
  • Clothing;
  • Food;
  • Religious materials; and
  • Pets.

Some properties do not count towards the monetary exemptions until they surpass a set amount or value. For jewelry, as much as $12,500 is exempt for individuals, and $25,000 for those in marriages. People with livestock can automatically keep a set number of animals, depending on the type. Gun owners can exempt two firearms.

Other Assets

Most retirement plans, pensions and insurance benefits are exempt under both Texas and federal law. Bankruptcy filers can also protect college savings accounts and equipment needed for their livelihoods. However, Texas does not exempt money awarded from a lawsuit.

Choosing Your Exemptions

If Texas law does not protect a valued asset from seizure by a creditor, federal law has a wildcard exemption that can cover any property up to a certain value. However, by using the federal exemption, you will no longer be able to use the Texas exemptions. A Frisco bankruptcy attorney at The Page Law Firm can help you determine which exemptions will benefit you the most. To schedule a free consultation, call 214-618-2101.


National Association of Consumer Bancruptcy Attorneys State Bar of Texas
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