You might be surpised to know that bankruptcy laws are not the same in each state. Although federal bankruptcy laws provide some consistent guidelines for state bankruptcy laws, each state has some lead way in their interpretation and application of federal bankruptcy laws. The biggest area of variation among bankruptcy laws between states has to do with asset exemptions.
In Texas, bankruptcy filers to choose between federal exemption laws or state exemption laws. Texas is one of the most lenient states in asset exemption in bankruptcy. In most cases, you would be able to protect more of your assets from liquidation in bankruptcy if you choose Texas exemption laws over federal.
Top Texas Exemptions
Homestead: In Texas, you are allowed to protect your home from seizure and/or liquidation up to an unlimited dollar amount of the value of the property; whereas the federal exemption only allows for protection up to $125,000. There is also an acreage allowance of 1 acre for property in city limits and up to 200 acres outside of city limits under the Texas laws. This exemption is especially helpful if you are located in a major city, such as the Dallas-Fort Worth area. Dallas bankruptcy cases would benefit from choosing the Texas exemption as most homes are located on one or less acres.
Personal Property: Texas bankruptcy laws can protect more your personal valuables such as jewlery, furniture, clothing, antiques and collectibles. Under the Texas exemption, you are allowed to claim up to $30,000 (individual) or $60,000 (family) for asset protection. Texas also allows you to protect your motor vehicles of an unspecified value, one for each licsenced driver in the household. Federal laws only allow up to $11,525, with $3,450 allotted for a motor vehicle.
There are some small differences in the amount and type of wages, retirement plan funds, savings or pension funds that are exempt. Both state and federal laws protect these types of assets well during bankruptcy.