Declaring bankruptcy does not necessarily mean that you will have to forfeit the property that you value most such as your home or your car. In fact, bankruptcy can help you keep your property.
Your ability to preserve assets may depend on the type of bankruptcy that you declare. Here is some important information to keep in mind about declaring bankruptcy in Texas.
Chapter 7 bankruptcy
Bankruptcy laws in Texas protect certain types of property from creditors in Chapter 7 bankruptcy. If you have declared homestead on your residence, you will be able to keep it. However, a property for which you have not declared bankruptcy is not exempt. Likewise, some personal property such as a motor vehicle or home furnishings is also exempt from forfeiture.
Although Chapter 7 discharges your payment obligation, creditors may still have valid liens. If you try to sell property, the buyer will take the property subject to any valid liens.
Other bankruptcy options
Chapter 7 is not the only option you may have when facing bankruptcy. When you file for Chapter 13 bankruptcy, you may be able to keep both exempt and nonexempt property. However, Chapter 13 does not discharge debt in the way that Chapter 7 does. Instead, this type of bankruptcy entitles you to enter into a repayment plan. You must keep up with the payments set forth in your individual repayment plan in order to maintain property such as a home or car.
Choosing the right type of bankruptcy is essential for preserving your property and minimizing your repayment obligations. What is right for you will depend on your existing debt, your income and the value of your assets.