One of the main policy objectives of Bankruptcy is to give debtors a fresh start. A fresh start entails allowing the debtor(s) to continue on with their life – but also not allow them to have a leg up. Different state legislatures have codified this general concept into their own exemption laws for their residents.
In Texas, residents are allowed to choose between two exemption systems: (1) The Federal Exemptions; and (2) The Texas Exemptions.
The Federal Exemptions
Believe it or not – 90% of cases I file use the Federal Exemptions. The reason for this is simple – the Federal exemptions allow for a WILDCARD exemption under section 522(d)(5). The wild card allows you to exempt any property which is otherwise not specifically provided for under the exemption system. Most other property that people have is provided for under the Federal Exemptions (household goods, clothes, personal items, jewelry, equity in home, etc).
The dollar amount for WILDCARD exemption is currently set at $1125 (per person filing – so $2250 per married couple). In addition the WILDCARD allows you to use the unused portion of the homestead exemption up to $11,500 ($23,000 for a married couple). This adds up to a very large amount for anybody who does not own a home or who have very little equity in their home. The most common uses for this using this WILDCARD include money in your bank account and an income tax refund. However, it can also be used for things like a boat, motorcycle, extra car, or anything else that you can think of.
Consult with the experienced Plano Bankruptcy Attorneys at Collins & Arnove to go over your personal and real property and determine what exemption system is right for you. We are experts in ensuring you get all the property you are entitled to the under the law.