These are the most common questions I am asked during an initial client consultation: Will I lose my home if I file for bankruptcy? What about my car? My IRA, or 401K? The good news is, for most prospective bankruptcy debtors filing bankruptcy with Texas, rather than Federal, exemptions the answer is generally no, subject to certain conditions. Texas is a debtor-friendly state and, with regard to your creditors, you couldn’t have a better state to call home.
In Texas, your homestead and your retirement funds are generally exempt from the reach of creditors, and you will not normally sacrifice these assets in a bankruptcy. If you file for bankruptcy, you are generally allowed to keep your home – if, of course, you are presently or can reasonably become current on your mortgage payments. If you have a home mortgage, you are allowed to reaffirm your mortgage obligations. Similarly, you are also allowed to reaffirm any financing obligation you have as to your vehicle. As for your retirement funds, the bankruptcy courts recognize that such funds are exempt and generally are not considered a resource for payment to your creditors.