| Bankruptcy Law - Questions & Answers
What happens to my personal
property, real property and other assets?
You are required to file a schedule
with the court describing all of your assets.
Certain property is either excluded from the bankruptcy
or exempt, and you will be able to keep that property.
Often, all of your assets can be protected.
If you have property that is
not exempt, that property or its value, must be
turned over to the bankruptcy trustee, who will
sell it and distribute the proceeds to your creditors.
In Texas, debtors may choose
the Texas exemption list or the Federal exemption
list. Each of these lists allows the debtor to
exempt an amount of real and personal property,
but the lists are not identical. For instance,
the Texas list allows a debtor to exempt a homestead
without regard to its value, but the Federal list
allows only a limited homestead exemption. On
the other hand, the Federal list may allow you
to exempt some property, like cash, that the Texas
list doesn’t provide for. Which one you
use depends on the nature of your property and
the debt you owe on that property. An attorney
can help you analyze your assets and debts to
determine which exemption list is right for you.
Also, the bankruptcy code imposes
certain limits on homesteads, restricting the
Texas homestead exemption to 125,000 if the property
was acquired in within approximately 3 years and
4 months from the date of the bankruptcy filing.
In many cases you can retain
your home and automobile. If you are behind in
making payments on a loan secured by a home or
automobile or the home or automobile has equity
in excess of what you are allowed to exempt, you
might consider filing a Chapter 13 petition. You
can then develop a plan for repaying your creditors
without necessarily liquidating assets.
Even in bankruptcy, the secured
creditor is entitled to get back the collateral
or its value. Debtors can avoid this result by
continuing to pay their secured loans during bankruptcy
and entering into an agreement with the creditor
to continue paying the note after the bankruptcy
is over, if necessary.
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