What Happens To Your Assets After Filing For Bankruptcy?
You may find that there is no other option for you but to file for bankruptcy. Deciding to do so can be nerve-wracking, but after fighting debts for so long, it may be worth considering.
While you see yourself gaining from it after finally controlling your debts, what exactly do you lose?
Things You Could Lose Once You Declare Bankruptcy In Texas
For starters, you will lose the mounting pressure from creditors. If you file for Chapter 7 bankruptcy, however, you may also lose some assets that the court will compel you to sell to pay off your debts.
It is possible to lose your property, whether it be your home or your vehicle. However, exemptions can cover these as long as they are within a certain limit. That said, you should be ready for other assets you could lose when declaring bankruptcy.
Your Luxury Items
Exemptions do not protect luxury items like yachts, expensive artwork, or vacation homes. The trustee will sell off these items and use the proceeds to pay the people you owe money to. Anything you use for your everyday needs, such as the vehicle you need to get to and from work, may not be considered a luxury item.
The Credit You Built
By the time you file for bankruptcy, your credit may not be at its best. While bankruptcy may force you to rebuild your credit score, it may also be the fastest way to start over if you are in deep debt.
Exemptions
State exemption laws can protect certain kinds of property from creditors in bankruptcy. These exemptions can include an inexpensive car, tools for your trade, and even a retirement account. After all, the idea of bankruptcy is not to take away everything but to give you a new start and protect the interest of you and your creditors.
In Texas, you have the choice of using federal exemptions or generous state exemptions. You may also apply for federal non-bankruptcy exemptions, which are more specific.
Texas has several exemption options that allow you to keep your most essential assets.
Texas Homestead Exemption
Texas offers exemptions for homesteads for a residence that is 10 acres or less in a city or up to 100 acres in the countryside. It is also possible for the exemption to cover up to 200 acres for families in the country.
Texas Motor Vehicle Exemption
The exemption for motor vehicles in Texas allows you to exempt the entire value of one car per licensed household member. Even if they do not have a license, they can claim an exemption if they rely on someone else to operate the vehicle.
Texas Personal Property Exemptions
Exemptions for personal property cannot exceed $50,000 for a single adult and $100,000 for a family. If your family’s personal property is at $150,000, then only the first $100,000 would be exempt.
The bankruptcy trustee will review your exemption claims. If the trustee disagrees with your claims, they will talk to you about it and may file an objection.
Bankruptcy Help With An Attorney
Whether you need exemptions or not, bankruptcy helps you get a clean slate away from creditors. Most people will try to employ counsel if they can find a way of covering the costs. Regardless of what you lose, there is still more that you can keep in bankruptcy.
If you need help filing for bankruptcy and knowing which exemptions apply to you, contact Lincoln-Goldfinch Law and speak with a bankruptcy attorney.
Summary
You may lose luxury items during bankruptcy. It can also affect your credit score. Texas law allows for exemptions on certain assets such as a vehicle that you need every day, homesteads, and some forms of personal property. This means that you can still keep your essentials in bankruptcy, especially with exemption laws in Texas.
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