In the average case where a person falls in the window to qualify for bankruptcy, they can keep everything they have. In a situation where somebody does not have enough exemptions or coupons to protect all of their things, if something is unprotected, then we would strategize about ways to change some things legitimately to where with a little bit of time and preparation, everything would be protected.
If there is a situation where something would not be protected, then it is up to the client to decide if it is worth getting rid of that one thing that is not protected, in order to get rid of the rest of the debt. A person may choose not to file just because they would have to lose something. There have been a handful of clients over the past 14 years where there was something worth $5,000 that was not exempted and they were not able to protect it but they decided to lose the $5,000 thing to get rid of the $30,000 in credit card debt. In one case in particular, someone had a vacant lot, which was only worth $5,000, but we could not protect it because there was no exemption for that. It was just an empty lot that was not attached to his homestead. The trustee could not sell it so she just gave it back to the client but he had to make that choice before we ever filed. There was a possibility of losing something that could not be protected, in his instance, a plot in an older part of the town that nobody wanted to buy. He agreed that it would be worth losing that piece of property to lose all the debt.
What Things Are Protected In A Bankruptcy, Like House, Cars, Jewelry And Those Kinds Of Things?
In Texas, a person’s homestead has unlimited protection and one car per licensed driver is allowed, along with most of the household goods and furnishings which are all protected. The limit is up to $30,000 for an individual and up to $60,000 for a married couple so typically everything is protected. There is nothing unprotected for the average case. If something is unprotected, it is easily identifiable and we just tell the person their options.
What If The Cars Have Loans On Them? Would A Person Be Able To Get Rid Of The Loans And Keep The Car?
No. If someone had a house or a car loan and wanted to keep the house or car, then they would also have to keep the loan, because people have to pay for their possessions. There is no way to get rid of the car loan or the home loan and there is no way to restructure the loans on those things in bankruptcy. In a chapter 7 bankruptcy which lasts 90 days, a person would file and then 90 days later, they would be out of debt except for the debt they want to keep. If someone wanted to keep the home loan, they would also keep that home loan payment and it would be the same for car loans, that they would keep that car loan payment.
What Can’t Be Discharged In Bankruptcy?
The most common things are taxes, student loans, child support and any sort of fine, but there are also exceptional cases where there are any acts of fraud or misrepresentations.
For more information on What Assets Can We Keep During Bankruptcy, a free initial consultation is your best next step. Get the information and legal answers you’re seeking by calling 210-930-7000 today.