Chapter 7 Bankruptcy
Your Property and the Homestead Exemption
Your property and the bankruptcy court. This page
is here to help you inventory your property and determine what property is
exempt. Fortunately, Texas has a very liberal homestead exemption list.
Most people in bankruptcy are happy to discover that they can keep
virtually all of their property. An exception to this is secured debts
which may be taken even if it is exempt.
When you file for bankruptcy, everything that
you own as of that date becomes subject to the bankruptcy court's
authority. This property is called your "bankruptcy
estate." With a few exceptions, property you acquire after you
file bankruptcy is not included in your bankruptcy estate.
in Bankruptcy Estate
Which Is Exempt From Bankruptcy - Property You Can Keep
That You Own and Possess: When you think about your property, we
are sure that the first thought that comes to mind is the property
which is in your possession like clothing, books, a TV, stereo,
furniture, tools, car, real estate, boat, artworks, jewelry, and stock
certificates. These items are all part of your bankruptcy estate.
However, property that you do not have the power to sell or give away
is not part of your bankruptcy estate. For example, if you are a
trustee of a trust for the benefit of someone else, like your
children, this property is outside of your bankruptcy estate because
you do not have the right to sell, assign, or give it away. Further, a
leased car is not part of your bankruptcy estate (you control the car
but you do not own it).
You Own But Don't Possess: Any property you own but don't possess
regardless of whether you have physical possession of it is part of
your bankruptcy estate. An example might include a mountain cabin that
you have an interest in but do not ever use. Other examples include
deposits held by stock brokers or a security deposit held by the
landlord. This is property you own but do not possess.
You Have Recently Given Away: If you are contemplating bankruptcy
and are tempted to give property away or pay a preferred creditor
(Dad) just before filing. Forget it. Property given away or paid out
shortyly before filing bankruptcy will be examined by the
trustee. Bankruptcy pleading require that you list all property
that you have given away for the past year. The trustee has the power
to seize it. Further, failure to list this property is bankruptcy
fraud and may/will place you in jeopardy of Federal Criminal
Prosecution. Likewise, you cannot pay off your creditor father, or
friend to the detriment of other creditors. You can't play favorites.
Your Are Entitled to Receive But Don't Yet Possess When You File.
Property that you have a legal right to receive but haven't yet received
when you file for bankruptcy is included in your bankruptcy estate.
Common examples are (1) wages earned but not paid; and (2) tax
Property Acquired Within 180 Days After You File for Bankruptcy.
Most property you acquire - or become entitled to acquire after you
file for bankruptcy isn't included in your bankruptcy estate. There
are exceptions. If you acquire or become entitled to (1) inherited
property or (2) property from a marital settlement agreement or (3)
death benefits or life insurance policy proceeds you will have to
report the acquisition to the bankruptcy court.
Share of Marital Property. All marital property that fits into any
of the above five categories is property of your bankruptcy estate. In
Texas, we are a community property state. This means that all property
either spouse earns or receives during the marriage is community
property and is owned jointly by both spouses. If you are
married and file for bankruptcy, all the community property you and
your spouse own is considered part of your bankruptcy estate, even if
your spouse doesn't file.
Texas has a liberal homestead
statute. Though the federal Statute has an exemption list, it also looks
to state exemptions in order to determine what exemptions to apply in a
bankruptcy. Note: this is subject to change. Congress is considering
creating a federal exemption that will preempt the state
Exemption: Real property of unlimited value but cannot exceed 1
acre in town, village or city or 100 acres (200 acres if married)
elsewhere. Sale proceeds are exempt for six months after sale. No need
to occupy residence if no other home is acquired. You must file a
Property: Athletic and sporting equipment, including bicycles; 2
firearms; home furnishings, including family heirlooms; food;
clothing; jewelry (not to exceed 25% of total exemption); 1 two-,
three- or four-wheeled motor vehicle per member of the family or
single adult who holds a driver's license (or operates vehicle for
someone else who does not have a license); 2 horses, mules, or donkeys
and a saddle, blanket and bridle for each; 12 head of cattle; 60 head
of other types of livestock; 120 fowl; and pets to $30,000 total
($60,000) for head family. Burial plots and health aids. Total
includes tools of trade, unpaid commissions, life insurance cash
Church Benefit plan benefits; fraternal benefit society benefits;
life, health, accident or annuity benefits or monies, including policy
proceeds and cash values to be paid or rendered to beneficiary or
insured. Life insurance present value if beneficiary is debtor or
debtor's dependent. Retired public school employees group insurance.
Texas employee uniform group insurance. Texas state college or
university employee benefits.
County & district employees. ERISA-qualified government or church
benefits, including Keoghs and IRAs. Firefighters. IRA's to the extent
tax-deferred. Judges. Keoghs to extent tax-deferred. Law
enforcement officer's survivors. Municipal employees. Police
officers. Retirement benefits to extent tax-deferred. State employees.
of Trade: Farming or ranching vehicles and implements. Tools,
equipment (includes boat and motor vehicles) & books.
Earned but unpaid wages. Unpaid commissions to 75% of personal
Benefits: Crime victims' compensation fund, medical assistance,
pubic assistance, unemployment compensation.