For most people, the idea of having to file for bankruptcy protection is an avenue of last resort. If you are struggling to pay the bills each month yet falling farther and farther behind nonetheless bankruptcy may be your best option. You may be concerned that you will lose everything you have worked so hard for if you file for bankruptcy. While that fear is a common one, the truth is that filing bankruptcy does not mean you will lose everything. On the contrary, it often means you can prevent losing assets that would be taken away if you don’t file for bankruptcy protection.
The majority of our clients file Chapter 7 bankruptcy cases. Texas and federal law have strong exemptions which enable you to keep the majority of your assets. For example, Texans can retain 10 acres in the city as their homestead. If they live in the country, they can retain 200 acres if they are a member of a family and 100 if they are single. Texas families can also retain $60,000.00 of their home furnishing and tools of their trade. Retirement accounts are exempt up to $1 million. A car can be retained for each member of the family and many times, additional vehicles can also be retained. Because of the liberal state exemptions offered in Texas and also available under federal law, most debtors who file under Chapter 7 do not lose any of their assets as part of the bankruptcy process.
If your home has a mortgage loan against it, you will be required to pay that loan if you want to keep your home. Similarly, you must pay the purchase money loan for your vehicle if you intend to keep it. We assist many of our clients with home loan modifications that reduce the monthly payment that they are paying on their homes. We also work with a local car dealership who helps our clients obtain loans for new or late model vehicles while they are in Chapter 7 which enables them to immediately begin restoring their credit. In fact, it is rare that any of our clients loose any of their assets when they file a bankruptcy case.
While it is certainly common to be concerned that bankruptcy will result in losing assets, the reality is that a debtor filing bankruptcy in Texas will generally be able to keep all, or most, of his or her assets while still being able to discharge the debts that are causing their financial crisis.