“Can I keep my stuff?” is one of the most common questions asked by a bankruptcy client of Bailey & Galyen, and for the overwhelming majority of our clients, the answer is yes … you can keep your stuff after a bankruptcy.
Assuming you have lived in Texas at least two years before the filing of a bankruptcy, you can choose between the Texas and federal “exemptions” — laws that allow you to protect and keep property through a bankruptcy. The choice of exemptions is an important legal decision that will bebased on the kind of property you own and its value, and at Bailey & Galyen our job is to maximize your exemptions. Both exemption paths have a few things in common:
- Homesteads are exempt from your ordinary creditors. Mortgages, taxes and certain other debts remain on your home.
- Most vehicles are exempt from your ordinary creditors but, like houses, are subject to valid debts from any vehicle finance company.
- Retirement assets (such as 401(k)s, IRAs, pensions, teachers’ retirement, etc.) are exempt from your creditors.
- Most if not all of your personal property assets are also exempt from ordinary creditors (unless they have a “purchase money” lien on them like a car loan). This includes furniture, clothing, jewelry, tools of the trade, pets and household goods.
There are important limits on exemptions, and here at Bailey & Galyen our job is to apply the law to your specific situation so you know what your options are. Even if you own property of a kind that is normally not exempt, there may be bankruptcy options available to you that allow you to keep nonexempt property.
On a related note, you can also keep certain debts. Depending on the chapter of bankruptcy selected and your payment status with the creditor, you are generally able to keep debts on necessary property, such as your homestead and vehicle. “Reaffirming” these debts in a chapter 7 bankruptcy allows those debts to survive the bankruptcy so that you can keep the collateral (house or car) and hopefully rebuild your credit by continuing to pay those particular creditors.