On September 1, 2015, the State of Texas increased its personal property exemptions by a large margin. Exemptions are important because they used by Debtors both in protecting assets in bankruptcy and from judgment creditors in state court lawsuits.
Texas already had generous personal property exemptions, but this recent increase makes Texas an even better place to live to protect assets. The Texas Legislature’s enactment raised the amount a single adult can protect of the fair market value of personal property to $50,000. This is a $20,000 increase from the prior $30,000 amount. A family can now protect up to $100,000 of the fair market value of personal property. This is a $40,000 increase from the prior $60,000 exemption.
We have discussed before the importance of asset protection and property exemptions in bankruptcy. See our articles on protecting assets in bankruptcy and when you try and do too much exemption planning in bankruptcy. These significant increase mean that even more assets can be protected.
This increase matters because it continues to reflect the desire of the State of Texas and its Legislature to remain at the forefront of protecting its residents’ assets. By adjusting the amounts, Texas recognized that over time, due to inflation and many other factors, that the value of its residents’ assets continued to go up. Texas allows its residents to protect one vehicle per licensed driver and the legislature wanted to make sure that its residents get to protect that one car. Cars don’t cost $10,000 brand new anymore. Considering the average price of a new car is over $30,000 now, the increase allows the state to make sure that its exemptions keep up with the real world value of assets.
The Texas personal property exemptions are used by the residents of Texas to protect items like household furnishings, clothing, jewelry, electronics, toys, guns, vehicles and work tools. These exemptions are used both in bankruptcy and in the execution of judgments from state courts. The goal of exemptions is to ensure that state residents have the necessary things they need to continue with their lives. Exemptions are not about protecting each and every asset a resident has. It is about a balance between what is reasonable and necessary for each resident to keep and protect versus a creditor’s right to recover assets for debts owed. With these increased exemptions, Texas has allowed its residents to protect a lot more.
Take for an example a small business owner. A business owner can easily own equipment with values over $20,000 or more. When you file bankruptcy, you can protect those business assets, but if you are single, you used to only be able to protect them up to $30,000. That means you only had $10,000 in exemptions left to protect EVERYTHING ELSE in your household. Now that the exemption is $50,000, you can protect your business equipment and other tools of the he trade, your vehicle and a lot more It will really make a difference for some bankruptcy debtors.
If you are filing bankruptcy, the Texas Personal Property Exemptions Increase means that you can protect even more assets from your creditors. If you were borderline about possibly losing assets if you filed, rest assured this large increase should ensure you won’t lose anything. Exemption planning and asset protection in bankruptcy are very serious matters. You should make sure if you have a large number of assets or some very valuable ones, that you consult with an attorney before filing for bankruptcy protection.
This is something that is standard with our law firm when consulting with clients about filing for bankruptcy protection. We do an asset review and market valuation to get an understanding of what you own and what those items are worth. We use our years of experience to determine what can and what cannot be protected in bankruptcy. We also use our experience to help you plan your asset protection to protect or at least minimize the impact upon the thing that you need to protect the most. It is one of the most important components when filing bankruptcy. Do NOT leave this matter to an attorney who is not very familiar with bankruptcy law or asset exemptions. You literally could be risking your family’s personal property if you do.