If you are preparing to file for bankruptcy, you are also probably worrying about which assets you can keep and which you will lose. Exemptions are key, and Texas provides filers with some of the most generous exemptions in the nation.
Among these is the so-called wildcard exemption that prevents the bankruptcy trustee from seizing certain nonexempt assets.
Protect what you love
People who decide to file for bankruptcy protection face the anguish of having to turn over certain assets to the bankruptcy trustee. The trustee then sells these items to help satisfy creditor demands. For example, you might have to give up a piano that has been in your family for decades or a rare stamp collection started by your grandfather and handed down to you. With the wildcard, however, you may be able to keep these treasures.
The wildcard explained
Set by law at a certain amount, the wildcard exemption protects assets that are not already exempt during a Chapter 7 bankruptcy proceeding. Currently, the federal dollar amount is $1,250 per filer or $2,500 per married couple. This can apply to any uncovered property, such as a valuable painting, the cash in your bank account or any other asset that is important to you. Keep in mind that the federal law also allows for unused homestead exemptions of up to $11,837.50 for individual filers or $23,675 for married couples. If you have no home equity, you can add on the wildcard exemption and use the whole amount to protect other property, such as your sailboat or vintage baseball card collection.
Choose your scheme
In the state of Texas, you can choose the federal exemption system or the state exemption system, but you cannot use both. Your bankruptcy attorney can explain the wildcard in its entirety and offer guidance so that you get optimal protection and value when you file for Chapter 7.