Written by attorney Eric Stephen Southward

Your assets when filing Chapter 7 Bankruptcy in Houston

As part of the information you are required to disclose in your case is all of your assets. Assets include all real property like land, houses and mineral rights. You are also required to disclose all personal property like furniture, bank account, jewelry, vehicles, retirement plans, business assets such as inventory, tools and machinery or equipment, farm animals or guns, and unique things such as collections, causes of actions to recover money and expected inheritances. It does not matter if the items you own are in storage or located somewhere else. You must list them. Likewise, if you are married, Texas is a community property state, so you must list all community assets that you have an interest in as well.

When you file bankruptcy, you are allowed to exempt or protect a certain dollar amount or quantity of your assets. Here in Houston Texas, you have the advantage of using either the Federal or Texas state exemption schemes. Which one you use really depends upon which one you need. This is a very important step in learning how to file for chapter 7 bankruptcy and it is highly recommended that you consult with an attorney before trying to figure out the exemption schemes. The problem is that if you do not prepare the exemption schedules properly, you could subject some of your assets to being seized by your bankruptcy trustee.

Generally, we use the Federal exemption scheme because it has greater flexibility. However, the exemption for your homestead is limited so if you have a lot of equity in your house, then we use the Texas exemptions. As most people know, Texas has an unlimited homestead exemption. So if you have a paid in full house, you can protect and exempt it in your bankruptcy.

There are a couple of problems with Texas exemptions. You cannot protect any money in a bank account or CD. You also cannot protect next year’s expected tax refund. Further, although you can exempt one vehicle per licensed driver in your household, if you own a lot of vehicles, you could put them in jeopardy. Likewise, if you have a small corporation, you may not be able to shield its value in the bankruptcy.

If your homestead equity is small or you don’t own a home, then we use Federal exemptions. The Federal exemptions allow you to exempt over $11,000 per person in what’s known as a wildcard. This wildcard is like a joker in cards and allows you to exempt anything you want up to that total amount. So if you have a money in your bank account or expect a sizeable tax refund next year, you would be able to exempt it under the wildcard exemption.

Generally most household furnishings, clothing, retirement accounts and whole life insurance surrender values are exempt under both exemption schemes. If you have a lot of assets, multiple properties or vehicles, investments or a corporation, it is highly advisable to seek the counsel of a bankruptcy lawyer to help you understand what can and what cannot be protected in bankruptcy.

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