What to Do If You Can’t Protect All Your Property Using Texas Exemptions
Most states don’t offer the generous property exemptions available under Texas law, so people filing under Chapter 7 risk the potential loss of substantial assets. In Texas, though, a person may discharge debts and still keep most, if not all, of their property. But what happens if you have more property than Texas allows you to keep? Here are a couple of ways to avoid the loss of personal assets.
File Under Chapter 13
U.S. bankruptcy law only requires the relinquishment of property when you file a Chapter 7 petition. While Chapter 7 allows you to permanently discharge debt, which is often a significant benefit, you can also opt to file a debtor’s reorganization under Chapter 13. You may only file under Chapter 7 if you submit to the means test and qualify.
Transfer Assets in an Arms-Length Transaction
Protecting property using an asset transfer is a tricky process, so you should never attempt it without the help of your lawyer. Here’s why.
You cannot transfer property to another person at less than fair market value in anticipation of a bankruptcy, and then buy it back at the same price. That would constitute bankruptcy fraud. There is nothing, however, to prohibit you from selling your property at fair market value. Any proceeds of the sale will go into your bankruptcy estate, to be used to satisfy your creditors. If, after your bankruptcy is complete, you have the resources to repurchase your property at fair market value, you can do so.
For example, assume that you have a collection of rare books with a value that exceeds the amount of exemption available under Texas law. You can make an arrangement with a third party to sell those books at fair market value. You may need to have the books appraised before the sale. The purchaser of the books can subsequently agree to sell them back to you at fair market value, which will be determined at the time of the resale.
Contact an Experienced Rockwall, TX Bankruptcy Attorney
Let us help you take the right steps and make good decisions when filing for personal bankruptcy protection. At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.
