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What Property Can I Keep?

In a Chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors. You can choose between your exemptions under Texas law or under federal law. Generally, the federal exemptions are better, because of flexibility. However, if you have a large equity in your homestead or have a large amount of tools of the trade, you may be better off with Texas exemptions.

            Texas exemptions include:

(A)   Homestead, subject to purchase money or improvement liens thereon, consisting of a lot or lots not exceeding ten (10) acres if located in town, or 100 acres if home is rural (200 acres for family); and

(B)   Personal property having a value not in excess of $30,000.00 for single person or $60,000.00 for a family, provided they items fit into one of the following categories:

  • Household furnishings
  • Provisions for consumption (food)
  • Farming or ranching vehicles and implements
  • Tools of your trade or profession
  • Clothing
  • Jewelry not to exceed 25% of the values listed above ($30,000.00/$60,000.00)
  • Two firearms
  • Sporting equipment
  • One passenger car or light truck for each family member that is a licensed driver
  • Household pets and a limited number of farm animals
  • Present value of life insurance to the extent that a member of the family of the insured claiming this exemption is a beneficiary of the policy
  • Current wages
  • Professionally prescribed health aids
  • Alimony, maintenance or support received or to be received, and
  • Other very specific types of property

 

Federal Exemptions include:

*    Up to 17,425.00 in value in real or personal property used as a residence

  • Up to $2,775.00 in any one motor vehicle
  • Up to $450.00 in value in any particular item of household furnishings, or wearing apparel, up to a total of $9,300.00
  • Up to $1,150.00 in jewelry held for personal use
  • Up to $1,750.00 in tools of trade
  • Any unmatured life insurance contract on the Debtor other than credit life
  • Professionally prescribed health aids
  • The right to receive certain support and disability payments
  • The right to receive certain payments as a result of personal injury or wrongful death proceedings, and
  • Any property selected by the Debtor in an amount not exceeding $925.00 plus any unused amount of the $17,425.00 listed in (1) above, up to $8,725.00. This can include tax refunds.

     

     In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, for what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid for it or what it would cost to buy a replacement.

     You also need to look at your equity in property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000.00 house, with a $40,000.00 mortgage, you count your exemptions against the $10,000.00 mortgage, which is your equity if you sell it.

     While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases, you will have to pay the mortgages or liens as you would if you didn’t file bankruptcy.


 
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