Chapter 7 is the most common form of bankruptcy that people apply for in Texas. If you are struggling with repayments on your mounting debt, chapter 7 bankruptcy is often a viable solution to the problem, and can grant you a fresh financial start. However, before you consider filing for Chapter 7 bankruptcy in Texas, here are three important things you should be aware of.
Many people are unaware that filing chapter 7 bankruptcy doesn’t automatically imply that they would lose their property. Exemptions exist to provide some degree of protection to the debtors, and allow them a better starting point for regaining their financial well-being. A successful exemption claim can allow you to keep some, if not all, of your property following the conclusion of a bankruptcy case. Both the Federal and State law deal with exemptions. In Texas, it is often better to apply for state exemptions as they are, on a whole, much more lenient to the debtor.
2. Moving to Another Location
For various reasons, people may consider filing for bankruptcy after they have moved to another state or jurisdiction. In Texas, many people do so because of the more favorable exemption laws.
However, there are two important pieces of information you should be aware of; firstly, you must have lived in your current location for at least 91 days before you can file for bankruptcy there. Secondly, you must have lived in the same state as your current jurisdiction for the last 730 days before you are eligible for filing exemptions. This applies to all states, including Texas. If you do not meet these requirements, you have to file for exemptions under either Federal law, or the state you last resided in for a total duration of 821 days or more.
3. Deberry vs. Lowe
The recent court case of Deberry vs. Lowe last year is worth mentioning. After filing for Chapter 7 bankruptcy, Deberry, a Texan resident, successfully claimed an exemption for his home with no objection. Seven months later, the court ordered him to sell the house and he did so likewise. However, he didn’t reinvest the money in another property within six months of sale. The chapter 7 trustee Mr. Lowe, thereafter, filed a lawsuit against Deberry.
However, the 5th Circuit Court of Appeals sided with Deberry in their final decision, allowing him to keep the proceeds of his house sale. In light of this hearing, we can conclude that, in Texas, as long as you owned the property on the date of filing for bankruptcy and successfully claimed an exemption for it with no objection, you can sell it and do whatever you want with the proceeds.
Get Help from a Lawyer
Dealing with the law can be a complicated affair. Hiring a good attorney can save you a lot of headaches as well as vastly improve your chances of having a court decision that is more in your favor. If you located in or near Austin, TX and require an experienced lawyer that specializes in bankruptcy law, then consider the Law Offices of Sean T. Flynn, PLLC. To schedule an appointment, call 512-640-3440 or contact me online.