Texas Bankruptcy Laws

For the purpose of filing under Texas bankruptcy laws, property is considered to be of two general classes: real estate and personal property. Within the RE class, sub-classification is based upon "homestead" status according to technical rules. Personal items are sub-classified by the state legislature's opinion of necessity subject to specific value limitations. If equity owned is above the statutory limit, by a significant amount, trustees ordinarily require forfeiture of personal property.

According to Texas bankruptcy laws, the retention of all property depends on the chapter selected. Chapter 7 requires strict compliance with various statutory rules & values. Chapter 13 contains a less direct approach, creating, as a condition for confirmation of the plan, that the court verify creditors receive at least as favorable treatment under the plan as would be available if filing Chapter 7. Most valid liens survive despite filing. Creditors may foreclose liens (with court approval) in the event of non-payment in both Ch. 7 and 13 plans. In addition to purchase money security interests, other liens may be created by operation of law to protect payment of child support, taxes, and emergency hospital treatments. These statutory liens also remain largely unaffected.

Texas Bankruptcy Laws - Homesteads and Other Real Property

Texas bankruptcy laws determine a debtor's right, title, and interest in land. Homes used as a primary residence receive greater protection, while secondary homes, invest property, and non-possessory land interests are subject to forfeiture. For more information regarding TX homestead laws, see: definition, exempt from seizure, and exceptions.

Texas Bankruptcy Laws - Personal Property and Benefits

All assets owned must be disclosed in schedules filed, to the trustee, and to the court. The definition of property ownership is construed broadly, and include not only traditional assets, but also includes a wide variety of intangible, contingent and mixed property rights. For instance, legal rights, contract benefits in the future, potential claims and litigation, and legal entitlements may all represent bona fide value and must be disclosed. Only specific property may be retained according to Texas bankruptcy laws, including:

• Personal Property
• Insurance and Retirement
• Child Support
• Miscellaneous Items

Creditors are subject to Texas bankruptcy laws restricting permissible collections. If the Texas bankruptcy court lifts an automatic stay, and permits a specific creditor to seize or liquidate property subject to a valid lien, creditors must also obey all state law limitations on collection practices. For more information about permissible collections, see legal assistance for debtors. Also, Texas bankruptcy laws provide extensive regulation and prohibitions against fraudulent conversions used to create exempt property during the year before filing.