Perhaps a Texas resident has spent several years accumulating certain assets but then falls on hard financial times. With the debt continuing to mount, he or she decides to look into filing a Chapter 7 bankruptcy in an effort to correct the situation. However, if a person owns certain assets, this may not be the right move.
This type of bankruptcy is commonly referred to as the "liquidation" bankruptcy. The trustee sells the filer's property and uses the proceeds to pay creditors. Fortunately, not all of a person's property is sold since the law acknowledges that people need some assets in order to live. When filing a Chapter 7, the law allows filers to retain property that falls under the category of exempt.
However, not all property will be covered by an exemption. The trustee may sell items such as family heirlooms, coin or stamp collections, or expensive musical instruments, along with other valuables such as stocks, bonds, cash, or other expensive investments or items. Moreover, if an individual has a second home or vehicle, those could be put up for sale as well.
In order to try to keep these assets, it may be best to avoid a Chapter 7 bankruptcy if possible. Instead, a Texas resident with these types of assets would do better to look into filing under Chapter 13. Each type has its own pros and cons, and a person would need to assess all of his or her options and evaluate all assets before making a decision. For this reason, an individual should seriously consider talking to an attorney before moving forward.