The Federal Bankruptcy Exemptions

February 6, 2018 By: Carrie Weir

When you seek protection under Chapter 7 of the Bankruptcy Code (assuming you have met the requirements of the “means test”), you can permanently discharge certain debts in exchange for allowing the bankruptcy trustee to sell some of your assets and give the proceeds to those creditors. However, you don’t have to transfer everything to the trustee—some assets are considered exempt. When filing for bankruptcy in Texas, you can elect to take the Texas state exemptions or the federal exemptions. Here’s what you can exclude if you opt for the federal exemptions:

• The homestead exemption—The homestead exemption allows you to keep some of the equity in your home. Under the federal provisions, you can currently claim up to $23,675 in equity in your home. It can be just about any type of real estate, from a co-op or condominium to a single family home or even a burial plot. The only requirement—you must actually live in the dwelling to claim the homestead exemption.
• Personal property exemptions—The federal bankruptcy law also allows you to keep certain personal property, including:
  • $2,375 worth of business or trade tools, including books
  • $3,775 of the equity in a car or motor vehicle
  • $1,600 worth of jewelry
  • $12,625 in interest, loan value or dividends from a life insurance policy
  • $12,625 for general household goods, such as appliances, musical instruments, electronics, books and even pets
• Personal injury awards—You can exempt up to $23,675 of the proceeds of a settlement or verdict in a personal injury lawsuit
• Retirement plans—As a general rule, retirement plans are not part of a bankruptcy estate, except for any amount in an IRA that exceeds $1,283,025

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.