Ch. 7 & Property

The Polk Law Firm

Dallas Bankruptcy Attorneys

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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.

Property in Bankruptcy Estate

bulletProperty That You Own and Possess
bulletProperty You Own But Don't Possess
bulletProperty You Have Recently Given Away
bullet Property You Are Entitled To Receive But Do Not Yet Possess at the Time Of Filing
bullet Certain Property Acquired Within 180 Days of Filing

Property Which Is Exempt From Bankruptcy - Property You Can Keep

bulletReal Property
bulletPersonal Property
bulletInsurance
bulletPensions
bulletTools of Trade
bulletWages
bulletPubic Benefits

Property in the Bankruptcy Estate

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Property 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).

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Property 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. 

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Property 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.

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Property 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 refunds.

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Certain 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.

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Your 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. 

PROPERTY YOU CAN KEEP

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 statute.  

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Homestead 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 homestead exemption.

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Personal 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 value. 

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Insurance: 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.

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Pensions: 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. Teachers.

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Tools of Trade: Farming or ranching vehicles and implements. Tools, equipment (includes boat and motor vehicles) & books.

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Wages: Earned but unpaid wages. Unpaid commissions to 75% of personal property.

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Public Benefits: Crime victims' compensation fund, medical assistance, pubic assistance, unemployment compensation. work

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The Polk Law Firm

Dallas Bankruptcy Lawyers 

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