Debt Advizor

As a Texas resident before considering bankruptcy there are several options you might want to pursue. The availability and usefulness of these options will depend on your employment (or income) situation and the type of assets you have. These other options could involve consolidating your payments through a Credit Counselling Service or consolidating all your debt through a debt consolidation loan.

There really are two types of debt consolidation loans, the first type is secured by equity in your home, and the second is unsecured (see our post on Texas Exemptions). With a debt consolidation loan that is not secured by your home a company simply loans you money to pay off your debt. You make one monthly payment to the consolidation company and they take care of the debt with your creditors.

You may also be able to lower your cost of credit and improve your financial circumstances by consolidating your debt through a second mortgage or a home equity line of credit. Think carefully before taking this on. These loans require your home as collateral. If you can’t make the payments-or if the payments are late-you could lose your home.

This option is especially important to consider if you have more equity in your home than you are allowed to protect with your Texas home exemption. If you have more equity in your home than can be protected with your Texas home exemption you will either have to surrender you home under a Chapter 7 bankruptcy or, if you want to keep your home, create a payment plan under a Chapter 13 bankruptcy. If you are considering a Chapter 13 bankruptcy to keep your home you might want to first pursue the debt consolidation option.

The Texas bankruptcy exemptions chart, see below, details the property you can exempt or protect from creditors when you file bankruptcy in Texas. You may exempt any property that falls into one of the exemptions categories below, up to the dollar amount listed. You will be able to keep this exempted property after you file bankruptcy. Please note that there are certain debts, which you will not be able to erase in bankruptcy (see Non-dischargeable Debts).

In Texas, you also have the choice of using the federal exemption statutes instead of your Texas exemptions.

An exemption limit applies to any equity you have in the property. Equity is the difference between the value of the property and what is owed on the property. For example, a car valued at $5000 with a loan of $4500 has an equity value of only $500. We are offering aFree Triple Credit Score with free trial for our clients.

If the property is secured by a loan, such as a car or home, and you are current on the payments, the equity is covered by your exemptions, and you elect to keep making payments on the loan you generally can keep this property through the bankruptcy. If all the equity is not covered by your exemptions the trustee may elect to liquidate this asset and distribute the assets. Generally, in this case, you would be entitled to the value of your exemption in the asset as a cash payment.

Bankruptcy law allows married couples filing jointly to each claim a full set of exemptions, unless otherwise noted.

To keep non-exempt property, a debtor must generally pay the trustee the value of the non-exempt property.

When you file bankruptcy in Texas you may also use certain federal exemptions in addition to your Texas exemptions.