It can be extremely nerve-wracking to make the decision to go through with filing for bankruptcy. If you are considering taking that route to deal with your financial challenges, you may have concerns about losing everything and having to start over from scratch. The good news is that Texas’s homestead exemption is much more generous than those of many other states, and can help to protect your home from seizure once you file.
What the homestead exemption does
In general, creditors can seize your assets once you file for bankruptcy. However, Texas law protects the value of your home against seizure to satisfy your debts.
Unlike in many states, which protect only up to a certain amount of equity in your home, Texas law allows you to claim the entire value of your home under the exemption. However, your property must qualify under the statute in order for the exemption to take effect.
Types of properties that qualify for the exemption
If your home is located in an urban setting, then it qualifies as long as the land that it is on is 10 acres or less. Your home can qualify even if you use it as the headquarters of a business, as long as it is also your primary residence.
If your property is rural, and you are single, your property can qualify if it is 100 acres or less. If you are married, that limit increases to 200 acres. This can be in one lot, or in multiple lots, as long as they are contiguous. The exemption also covers any improvements on the land.
There is no magic bullet that will allow you to get through the bankruptcy process entirely unscathed. However, it does not have to be a devastating and financially crippling event, either. With a few key tools, such as the homestead exemption, you can set yourself up for a fresh start and begin to rebuild your financial stability.