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Should Texas Filers Choose State or Federal Bankruptcy Exemptions?

 Posted on May 09, 2023 in Chapter 7

san antonio bankruptcy lawyerMany individuals shy away from filing for bankruptcy because they may have heard they will lose everything they own if they take this course of action. This is a myth. While it is true that those who opt to file for Chapter 7 bankruptcy are at risk of having some of their non-exempt assets sold by the trustee assigned to their case, assets are only sold in a tiny fraction of cases.

With that said, it is vitally important to utilize all bankruptcy exemptions available to you, if you choose to file for Chapter 7 bankruptcy. Bankruptcy exemptions allow you to safeguard certain kinds of property – and certain values of property – from any chance that they will be sold by a trustee in order to repay your creditors. If you file for Chapter 7 bankruptcy in Texas, you are permitted to choose Texas exemptions or you are permitted to use federal exemptions. You cannot mix and match exemptions from both schemes, so making an informed choice about these binary options is important.

Texas Exemptions Are Almost Always Preferable

Most Chapter 7 filers in Texas opt to utilize state bankruptcy exemptions because they are arguably the most favorable exemptions offered of any state-based scheme in the U.S. Perhaps most notable, Texas allows filers to safeguard 100 percent of their equity in a primary residence, as well as the value of one vehicle per licensed driver within a filer’s household. A filer is then allowed to safeguard an additional $50,000 ($100,000 for couples filing jointly) in personal property value.

The primary reason why some Texans use federal bankruptcy exemptions instead is that Texas law requires filers to reside in Texas for at least two years prior to filing for bankruptcy before they can take advantage of state exemptions. Filers who do not meet this requirement are usually compelled to use federal exemptions instead.

Connect with a Skilled San Antonio Bankruptcy Lawyer to Learn More

If you do not earn much income and you are interested in filing for Chapter 7 bankruptcy to achieve a fresh financial start, consider connecting with a knowledgeable San Antonio, TX bankruptcy lawyer today so that you can receive personalized legal guidance and assistance. 

To schedule a free case evaluation, call 210-342-3400. Should you choose to move forward with filing a Chapter 7 bankruptcy case, our firm will be able to assist you with every step along the way.


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