Since you’re going to be around lawyers and court clerks for the next few months, do yourself a favor and read up on legal matters.
Arlington, TX – As the economy has been in bad shape for the past years, many Texans are afraid they’ll lose their homes as they cannot keep up with their mortgage payments. On the other hand, most of these people are afraid to do the only rational thing – file for bankruptcy – because they think they’ll lose their homes. Nothing could be further from the truth. Experienced lawyers say that if you’re worried about foreclosure, you should file for bankruptcy as soon as possible.
How to keep your house when filing for bankruptcy?
Most people struggling with debt will have to file for bankruptcy under Chapter 7. This is also known as liquidation bankruptcy. Liquidation is a scary word, but the truth is only your non-exempt property will be sold by the court-appointed trustee.
In Texas, you can use federal bankruptcy exemptions or go with the Lone Star state’s exemptions. To understand which you should choose, grab your financial documents and set up a meeting with skilled Arlington bankruptcy lawyers.
If it’s the house you’re worried about, they will advise you to go with state exemptions. Texas is one of the very few states with an unlimited homestead exemption. You won’t lose it if it sits on less than 10 acres of land in the city or less than 100 acres outside city limits. Even if your house features a pool or other improvements, everything is 100% exempt.
There are a few requirements, though. To be able to claim the homestead exemption you must bring proof you have lived in Texas for at least 1,215 days before filing for bankruptcy.
In case you’ve moved to Texas only 2 years ago, you may want to wait a bit. If you don’t qualify for Texas’ exemptions, you can still file for bankruptcy but the court will use the exemptions in use in the state you lived in before.
Can I also keep my car?
Absolutely. As all Texas bankruptcy lawyers will tell you, you can protect an unlimited amount of equity in your car using the motor vehicle exemption. Even better, you can exempt one car for each licensed driver who lives in the household. Or you can exempt a motor vehicle if your lawyers can prove an unlicensed driver in your household, such as your kid, relies on it for transportation.
How much personal property can I keep?
In many other states, the personal property exemption is worth $2,000 or even less. In Texas, you get to exempt up to $50,000 worth of furniture, firearms, jewelry, clothing, and other personal property.
If that doesn’t seem enough, reach out to some knowledgeable Arlington bankruptcy lawyers and let them have a look at the personal property you want to keep. You need to know that the exemption amount refers to the items’ as-is cash value, not the money you paid for them when you bought them. This is because the trustee wants to know how much money they can get on the assets they’ll put up for sale. Now, your furniture, electronics, and household appliances have almost no cash value if you’ve been using them for years. No one is going to buy your old dishwasher. In other words, those $50,000 can be stretched to cover most of your personal property.
One other thing, you can double the personal property exemption amount if your spouse files for bankruptcy at the same time.
Tip: Since you’re going to be around lawyers and court clerks for the next few months, do yourself a favor and read up on legal matters.