When people file for a Dallas bankruptcy, they want to know how bankruptcy exemptions will play a role throughout the process. Fortunately, both Chapter 7 and Chapter 11 bankruptcy provide their own set of exemptions for debtors. Understanding exactly how bankruptcy exemptions work can help you keep more of what you own. Without the help of an attorney, however, it can sometimes be confusing and difficult to realize the role bankruptcy exemptions play in your situation. Here’s a quick primer on how they work on both Chapters of bankruptcy.
Exemptions In Chapter 7
In this situation, the debtor’s belongings and property are acquired and liquidated to repay the outstanding debt. However, those filing under a Chapter 7 bankruptcy don’t have to lose everything they own. Bankruptcy exemptions include:
- Homestead. Federal laws limit protection up to $20,000 for homestead exemptions. State exemptions vary depending on each individual state and Texas is one of the more lenient states with the homestead exemption, often allowing unlimited value of protection over a home.
- Motor vehicle. While a car may be exempt during a Chapter 7 Dallas bankruptcy, there’s a limit as to the value actually protected. For instance, if a car is worth $40,000 and $30,000 is protected by a bankruptcy exemption, then the debtor would keep $30,000 if the property was liquidated by the bankruptcy estate.
- Personal property. Those who file for a bankruptcy don’t have to worry about losing important family heirlooms and other sentimental property, as some personal property is covered by bankruptcy exemptions. It’s important to note, though, that there’s usually a per item limit to these exemptions.
Exemptions In Chapter 13
Since a Chapter 13 Dallas bankruptcy requires you to pay back part or all of your debts over time, the exemptions determine your monthly payment. Under Chapter 13, you pay back the worth of the property that you would have otherwise lost if you had filed under Chapter 7 – this is where bankruptcy exemptions come into play. What property you would have kept or lost under Chapter 7 determines your payments in Chapter 13. Since each state has different exemption regulations, those seeking to file for a Dallas bankruptcy should seek the advice of an attorney for the latest exemption laws.