Bankruptcy is a fresh start, one that may come at the price of leaving some properties and assets behind. But there are some things vital to a happy and healthy life that can be preserved.
- What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is similar in most states in the sense that it turns over a person's assets to a trustee, who uses the proceeds to settle as many debts as possible. This process is often called liquidation. There are often exemptions from the process, such as primary residences and cars, which people need to keep their ability to earn income.
- How is bankruptcy different in the Lone Star State?
Some states, like Florida, include an exemption for personal property called homesteads. Under this clause, people can claim a certain amount of land around a primary residence as free from liquidation. Texas, however, is unique in offering an unlimited homestead exemption in cases of personal bankruptcy.
- Are there any ways in which this exemption doesn't protect people's property?
A court ruled that a person with a future interest in a home but no current interest may not claim a homestead exemption, even if the person currently lives there. Options on property may be claimed on their own as a homestead in certain circumstances.
- How can people claim homestead exemptions during bankruptcy?
Filing for bankruptcy is easier in general and possibly more effective if a lawyer handles the case. An attorney can prepare the initial filing along with claims for homesteads and other factors that can make the process easier. Legal representation is also useful during bankruptcy court proceedings and working with trustees.