Texas Vs. Federal Bankruptcy Exemptions

In a recent blog post, we answered the question “Will I lose everything if I file bankruptcy?” by explaining exemptions. Exemptions protect most, if not all, of the property that most people fear they will lose if they file bankruptcy, including the family home, car and personal property. There are two sets of exemptions: state and federal.

You Have The Choice

Most states require that you use their exemptions rather than the federal exemptions. Texas, however, allows you to choose between its set of exemptions and the federal exemptions. You cannot pick and choose between the best exemptions from each set. You have to choose the entire set based on your circumstances. This adds a unique layer of complexity to the bankruptcy process in Texas.

How Do You Choose Between State And Federal Exemptions?

Texas bankruptcy exemptions are generous and include an unlimited homestead exemption for houses on 10 acres or less in a city or on 100 acres or less in the country. But what if you do not own a home, do not have equity in your home or need to get rid of your home because your income will no longer allow you to keep up on payments?

Perhaps then the unlimited homestead exemption does not mean that much to you, but a certain aspect of the federal exemptions does.

Each set of exemptions has strengths and weaknesses that may matter more or less to you based on your circumstances. This is why it is important to enlist an experienced bankruptcy attorney who can carefully review your situation and help you pick the set of exemptions that makes the most sense for you.

At Wm. Barry Phillips, P.C., our decades of experience mean we understand both Texas and federal exemptions inside and out. After a careful analysis of your case, we can make a recommendation for the type of bankruptcy and the set of exemptions most appropriate for your circumstances. Our goal is to get you the debt relief you need with as little impact on your life as possible.