By: Julie Koenig
In Texas you are allowed to choose either the Texas Exemptions or the Federal Exemptions - whichever suits your particular needs the best. However, to qualify in Texas you must have lived in Texas for the previous 730 days - 2 years. If you did not live in Texas for the 730 days prior to filing, you have to use the exemptions allowed in the prior state in which you lived, with some exceptions. At your initial consultation, Ms. Koenig will determine the exact exemptions to which you are entitled.
Assuming that you have lived in Texas for the prior 730 days, the value of your homestead, if any, will dictate whether we use the Texas or Federal Exemptions. If you are single and the equity in your home is less than $23,675 or if you are married and the equity is less than $47,350, you qualify for the Federal Exemptions. Obviously, if you don’t have a home, you qualify for the Federal Exemptions.
Your exemptions become allowed 30 days after the concluded 341 or creditor’s meeting. This means, unless someone objects to the exemptions, your real and/or personal property as listed on Schedules A & B essentially leave the bankruptcy estate and you get to keep them. However, in a recent Fifth Circuit opinion, In re Hawk, the Court ruled that although your exemptions are allowed, if you sell any exempt property or withdraw funds from your retirement account(s) prior to your bankruptcy case being CLOSED, you lose the exemption and the funds must be paid to your Chapter 7 or 13 Trustee. Therefore, until your Bankruptcy Case is CLOSED, you must not sell any assets or withdraw funds from a retirement account or you will LOSE THE EXEMPTION. Please consult with Ms. Koenig if you have any issues regarding the need to sell or withdraw any exemptions.
Under the Federal Exemptions you are allowed:
- Up to $23,675 if single and up to $47,350 if you are married in equity in a home;
- Up to $3,775 in equity in a motor vehicle;
- Up to $12,625 in household furnishings, household goods, clothing, appliances, books, animals, crops or musical instruments used for the family;
- Up to $1,600 in jewelry; etc.
You also have what is called a "wild card' exemption that allows you to exceed these limits. The 'wild card' is $1,250 plus up to $11,850 that you did not use to exempt a homestead, per person. This 'wild card" allows you to exempt cash, equity in another piece of real property, extra equity in vehicles, potentially a business, and other normally non-exempt assets.
Of course, your right to social security payments, disability or unemployment benefits, and/or veteran's benefits is completely exempt.
Your right to receive alimony, support or separate maintenance is exempt to the extent it is reasonably necessary for your support and your dependant's support.
Your right to retain a retirement plan that is an IRS qualified retirement plan is also exempt to the extent it is reasonably necessary for your support and your dependant's support.
Other Federal Exemptions are also available and will be discussed to suit your specific needs.
Under the Texas Exemptions you are allowed:
- Your homestead, regardless of the amount of equity, provided that you have not increased the value of the homestead by more than $160,375 in the 1215 days (3.3 years) unless such increase comes from the sale of a previous homestead during this period. Normal appreciation does not apply. This law was enacted to insure that you did not use otherwise non-exempt assets to pay down or pay off your mortgage.
You are entitled to retain up to $50,000 if single or $100,000 if married, in personal property which includes:
- home furnishings including family heirlooms;
- provisions for consumption;
- farming or ranching vehicles and implements;
- tools, equipment, books and apparatus, including boats and motor vehicles used in a trade profession'
- wearing apparel;
- jewelry not to exceed 25% of the aggregate limits for a single person or married couple set forth above;
- two firearms;
- athletic and sporting equipment including bicycles;
- a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver's license or who does not hold a driver's license but relies on another person to operate the vehicle for the benefit of the non-licensed person;
the following animals and forage on hand for their consumption;
- two horses, mules, or donkeys and a saddle, blanket and bridle for each;
- 12 head of cattle;
- 60 head of other livestock; and
- 120 fowl;
- household pets.
- unpaid commissions for personal services not to exceed 25% of the aggregate limitations set forth above.
Certain property is exempt and not included in the aggregate limits set forth in paragraph 2. These are:
- Current wages for personal services, except for the enforcement of court-ordered child support payments;
- professionally prescribed health aids of a debtor or a dependant of a debtor;
- alimony, support, or separate maintenance; and,
- IRS qualified retirement plans.
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