The Definitions of all the Bankruptcy Codes in Texas

When filing for bankruptcy in Texas, there are several important codes and statutes to be aware of. Here is an overview of the major bankruptcy codes

Federal Bankruptcy Code

Chapter 7, Chapter 11, Chapter 12, and Chapter 13 of the US Bankruptcy Code provide the foundation for all bankruptcy cases in Texas. This federal code outlines different bankruptcy options and procedures.

Chapter 7

Chapter 7 bankruptcy allows for liquidation of nonexempt assets to pay creditors. Remaining debts are discharged, providing a fresh start. To qualify for Chapter 7 in Texas, a means test is used to determine if income is low enough.

Chapter 7 includes important Texas exemptions that protect property, which are found in the Texas Property Code.

Chapter 13

Chapter 13 bankruptcy allows for debt restructuring through a 3-5 year repayment plan. Chapter 13 lets debtors keep assets like homes. Texas uses state law exemptions here too.

Texas State Exemptions

Under the Texas Property Code, the state has its own set of bankruptcy exemptions that apply in federal cases. These determine what assets are exempt from liquidation.

Key Texas bankruptcy exemptions include:

• Homestead Exemption – Protects a primary Texas residence up to 10 acres in rural areas, with no dollar limit. In urban areas, protects up to 1 acre with no limit.
• Personal Property Exemption – Up to $50,000 in personal property can be exempted per single person, or $100,000 for married couples.
• Vehicle Exemption – Texas allows exempting up to $30,000 total in vehicle value.
• Retirement Account Exemption – Most retirement accounts are fully exempt.
• Tools of the Trade – Exempts up to $50,000 in equipment/tools used for work.

Texas opts out of federal bankruptcy exemptions in favor of its own generous set outlined in the Texas Property Code.

Texas Debtor Exemption Planning Statutes

The Texas Property Code includes statutes that limit exemption planning prior to bankruptcy. These include:

• Two Year Lookback Period – Transfers of nonexempt assets within two years before filing can be reversed.
• Limitations on Exemption Changes – Converting nonexempt property into exempt property within two years draws scrutiny.

These statutes aim to prevent improper exemption planning or asset concealment before bankruptcy.

Texas Homestead Protection Statutes

Texas provides strong protection for homestead equity, found in Sections 41.001 and 41.002 of the Texas Property Code. Key homestead protections include:

• Home Equity Loans Limited – Texas does not allow home equity loans to exceed 80% loan-to-value ratio.
• Homestead Liens Restricted – Liens can only be placed on a Texas homestead under limited circumstances, like for mortgages and property tax debt.
• Homestead Exempt From Judgement Creditors – Judgement creditors cannot force the sale of a Texas homestead to collect on debts.

Texas Collection Restriction Statutes

The Texas Property Code limits powers of creditors trying to collect on debts from consumer bankruptcies. These include:

• Restrictions on Wage Garnishment – Texas wage garnishment is limited to 25% of disposable income, or the amount exceeding 30 times the federal minimum wage.
• Limits on Reaffirmation Agreements – Strict limits are placed on reaffirming debt after bankruptcy. Certain disclosures and attorney reviews are required.

In total, these provide important consumer protections for Texas bankruptcy filers.

In Summation

Texas bankruptcy has special exemptions, homestead protections, and collection limits beyond federal law. By understanding the applicable codes in the Texas Property Code and US Bankruptcy Code, debtors can navigate the Texas bankruptcy process fully informed. When preparing to file, be sure to consult qualified local bankruptcy counsel regarding how these important statutes apply to your specific situation. The intricacies of Texas law provide robust protections that an experienced attorney can help maximize.

FAQS

What are the different chapters of bankruptcy in Texas?

Texas utilizes Chapters 7, 11, 12, and 13 of the federal Bankruptcy Code. Chapter 7 provides liquidation, while Chapter 13 allows debt restructuring. Chapters 11 and 12 offer bankruptcy options for businesses and farmers. The same chapters apply in Texas as in all other states.

How do Texas bankruptcy exemptions differ from other states?

Texas has some of the most generous state-level bankruptcy exemptions. Texas opts out of the federal exemptions in favor of its own exemptions under the Texas Property Code. Key differences include unlimited homestead exemptions, large personal property protections, and strong business tools-of-trade exemptions.

Can I reaffirm debt after filing bankruptcy in Texas?

Yes, you can reaffirm certain debts after bankruptcy in Texas, but the process is strictly limited. You must file a reaffirmation agreement with extensive disclosures. This agreement must be approved by the bankruptcy judge and is only allowed for property like cars when beneficial for you. Reaffirming debt should be carefully considered.

Are Debt and Financial Hardship Weighing You Down? Tyler Bankruptcy Attorney Howard Tagg Can Help You Find Relief

If unmanageable debt has you struggling to keep up with payments and creditors, bankruptcy may offer a way out. For over 25 years, experienced Tyler bankruptcy attorney Howard Tagg has been helping people across East Texas file bankruptcy to eliminate debt and get a fresh financial start.

Whether job loss, medical bills, credit cards, or other factors caused your financial hardship, the skilled bankruptcy lawyers at the Law Office of Howard Tagg can help you:

• Stop harassment from creditors and debt collectors
• Eliminate most unsecured debts like credit cards and medical bills
• Keep property like your home, car, and retirement funds
• Rebuild your credit and financial life after bankruptcy

Attorney Howard Tagg will take the time to understand your unique situation and recommend the best debt relief strategy, whether Chapter 7 bankruptcy to wipe out debt quickly or Chapter 13 bankruptcy to restructure payments. He knows how to maximize Texas exemptions to help clients keep essential assets.

With sound legal advice and compassionate counsel, Howard Tagg has assisted countless individuals and families to:

• Regain financial stability
• Save their home from foreclosure
• Recover from job loss or medical crisis

Don’t struggle under the weight of debt a moment longer. The skilled bankruptcy lawyers at the Law Office of Howard Tagg offer an initial free consultation and reasonable payment plans. Call (903) 581-9961 or contact us online to schedule your appointment. Get answers and relief from a trusted Tyler bankruptcy attorney.