Did you know that Texas has some bankruptcy laws that are unique to Texas? Do you know how Texas is different in terms of the bankruptcy exemptions it offers? Most people have no idea that states differ in terms of the way the handle bankruptcy. Each state has variations of bankruptcy law and states may differ in which assets are protected during bankruptcy. The laws about types of debt are best managed through bankruptcy also differ according to the state. Texas is one state that is working hard to protect its citizens during bankruptcy.
Although the basics of the bankruptcy process is dictated by federal law, there are some small procedural differences between states. The federal Bankruptcy Code controls much of how the bankruptcy process works and what types of debts are eligible for discharge. The differences in state laws may determine which type of bankruptcy is best for you. Depending on what assets you possess and what type of debt you have, certain state laws may suggest filing a specific type of bankruptcy. Different types of debt may be managed better under Chapter 13 bankruptcy than Chapter 7. The biggest impact that the state laws have on a bankruptcy case is how much of your property is considered exempt during bankruptcy.
Federal bankruptcy laws do offer protection for some of your assets in bankruptcy; Texas state laws are far more generous with allowing you to keep more if your personal property. The federal homestead exemption allows for your home to be exempt from bankruptcy, up to $20,020 in value. The Texas homestead exemption allows an unlimited value of your home to be exempt, up to 1 acre within city limits and 200 acres in rural areas. Only $10,775 worth of your persona property is exempt under federal law; whereas Texas allows up to $30,000 for an individual and $60,000 for a family. Your motor vehicle is protected up to a value of up to $3,225 by federal law. Texas will exempt one car, of any value, per member of the family in a bankruptcy proceeding. Insurance policies and retirement benefits are fully protected under both federal and state bankruptcy laws, unless the payments are to be garnished for fulfilling domestic support payments.