There is one debt relief option that some Texas residents may not explore out of fear of losing their property. The myths surrounding Chapter 7 bankruptcy include a story that anyone who files will lose all of his or her property. Fortunately, this simply is not true. Depending on the circumstances, some property may be surrendered to pay creditors, but more than likely, most people’s property will fall under one or more exemptions.
While bankruptcy is designed to provide filers with a clean slate and a fresh start, it does not mean that they must start over completely. Certain property will fall into several exemptions that allow it to be kept. For instance, the U.S. Bankruptcy Court does not intend to put people out of their homes if they wish to try to keep them by working out an agreement with the lender. As long as the value of a home does not exceed either the federal or Texas homestead exemption, it may be kept.
Most people need reliable transportation in order to get to and from work, the grocery store and other destinations. As long as a vehicle does not exceed a certain value, it may be kept as well. Personal property such as clothes, jewelry and household goods (furniture, dishes, etc.) may also fall under an exemption. The law even has an exemption amount for property that does not naturally fall into any other category. So long as the amount of this “wild card” exemption is not exceeded, filers can use this amount to protect their property as well.
Anyone contemplating filing for Chapter 7 bankruptcy, but fears that he or she will lose certain property, may want to discuss the matter with an experienced attorney first. In many cases, the property will fall under an exemption and may be kept. Do not let a myth, rumor or someone else’s experience stop bankruptcy from being a viable debt relief option.