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Dana Ehrlich - The Fresh Start Lawyer - Bankruptcy


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Exempt Property is the property that you get to keep in a bankruptcy proceeding. Exempted property is property that the debtor is allowed to keep.

There are two kinds of exemptions: those provided by federal law and those provided by state law.

Which kind of exemption you get is determined by where you live when you file and where you lived within 730 days of filing your case. Exemptions are complicated and this is the main reason you should not try to file for bankruptcy without the aid of an attorney. You could end up losing your property that you thought was exempt.

The following list is only a partial listing of Federal and State exemptions. In other words it is NOT all-inclusive.

Partial Listing Of Federal & State Exemptions:

TexasThe homestead exemptions include the following items:

Real Estate

An urban homestead consisting of the home or business, consisting of not more than the improvements and the 10 acres of land along with it; or if you live in a rural area, a rural homestead of up to 200 acres for a family or 100 acres for an individual. You cannot have both a residence and business homestead. And, you still must pay your mortgage on a homestead if you want to the keep the homestead.

Personal Property

A family is allowed personal property of an aggregate fair market value of not more than $60,000.00, or if the property is owned by a single adult not more than $30,000.00, in the following items of personal property:

a) The following personal property:

1) home furnishings, including family heirlooms;

2) provisions for consumption;

3) farming or ranching vehicles and implements;

4) tools, equipment, books, and apparatus, including boats and motor vehicles used in a trade or profession;

5) wearing apparel;

6) jewelry not to exceed 25 percent of the aggregate limitations ($60,000 or
$30,000 as the case may be);

7) two firearms;

8) athletic and sporting equipment, including bicycles;

9) a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member
of a family or single adult who holds a driver’s license or who does not hold a driver’s license but who relies on another person to operate the vehicle for the benefit of the non-licensed person;

10) the following animals and forage on hand for their consumption:

A) two horses, mules, or donkeys and a saddle, blanket, and bridle for each;

B) 12 head of cattle;

C) 60 head of other types of livestock; and

D) 120 fowl; and

11) household pets.

In addition, the following personal property is exempt regardless of amount:

1. Current wages for personal services, except for enforcement of court order child
support payments;

2. Professionally prescribed health aides of a debtor or a dependent of a debt; and

3. Alimony, support, or separate maintenance received or to be received by the
debtor for the support of the debtor or dependent of the debtor.

Please keep in mind that these exemptions do not apply to the seizure by a secured creditor with a contractual landlord’s lien or other security interest in the property. In other words, if you fail to pay the rent on your home or apartment, the landlord can seize your property.

More Exemptions in Other Kinds of Property

In addition, unpaid commissions for personal services not to exceed 25% of $60,000 for a family and $30,000.00 for a single adult are exempt from seizure.

Most retirement plans that are qualified plans under the Internal Revenue Code, including IRAs, are exempt, regardless of the amount contained in the plan. This would include stock bonus, pension, profit sharing or similar plans including retirement plans for self-employed individuals and any annuities or similar contracts, and any individual retirement account or retirement annuity or simplified employee pension plan. A person’s right to assets held in a government or church plan or contract is also exempt, if it qualifies under the applicable definitions of the Employee Retirement Security Act of 1974. Contributions to an individual retirement account that exceed the amounts deductible under the Internal Revenue Code are nonexempt, unless otherwise exempt by law. Nontaxable “roll-over” contributions under certain sections of the Internal Revenue Code are exempt.

The FEDERAL EXEMPTIONS consist of the following items (remember that the amounts constantly change, so consult with an expert prior to relying on any numbers in this article):

1. The debtor’s total interest up to $20,200 in value in property used as a residence
of the debtor or a dependent. The residence may be either personal or real
property. Accordingly, a mobile home, condominium apartment, or shares in a
cooperative that owns a residence qualifies for this exemption. Burial plots also
qualify for this exemption.

2. The debtor’s interest up to $3,225 in value in one motor vehicle.

3. The debtor’s interest in all household goods and furnishings, wearing apparel,
appliances, books, animals, crops, or musical instruments held primarily for
personal or family use by the debtor or a dependent. The exemption may not,
however, exceed $525 in value in any particular item. This exemption may not
exceed $10,775 in aggregate value.

4. An interest in jewelry held by the debtor or a dependent for personal or family
use. The total value of this exemption may not exceed $1,350.

5. In addition to all other exemptions, the debtor may claim as exempt an interest in
any property, including cash, not to exceed in value $1,075 plus up to $10,125 of
any unused portion of the residence and
burial plot exemption.

6. The debtor’s interest up to $2,025 in value in implements, tools, or professional
books used in the trade of the debtor or a dependent.

7. Any unmatured life insurance policy owned by the debtor, regardless of value or
face amount, other than a credit life insurance contract.

8. Professionally prescribed health aids for the debtor or a dependent of the debtor.

9. Many governmental benefits are exempt regardless of value. The debtor may claim
as exempt a Social Security benefit, unemployment compensation, or a local public
assistance benefit. A veteran’s benefit, as well as a disability, illness, or
unemployment benefit, and alimony and support payments usually qualify as
exempt property.

10. Certain rights to receive income are exempt, but only to the extent that they are
reasonably necessary for the support of the debtor and any dependent. This
exemption applies to alimony, support or maintenance payments. It also applies
to payment under a stock bonus, pension, profit sharing, annuity, or similar plan
on account of illness, disability, death, age, or length of service. However,
payment under a retirement plan is not exempt if the plan was established by or
under the auspices of an insider who employed the debtor at the time the
debtor’s rights in the plan arose, payment is on account of age or length of
service, and the retirement plan does not qualify for certain deferred tax benefits.

11. The debtor’s rights to receive several other types of payments are exempt. Included in this category are crime victim compensation awards without limitation. If the debtor was dependent on another person who is deceased, the debtor’s rights to
life insurance proceeds and wrongful death payments relating to the decedent
are exempt to the extent reasonably necessary for support. If the debtor suffered
personal bodily injury, payments arising from the injury are exempt up to
$20,200, but this exemption does not cover awards or settlements for pain and
suffering, loss of past wages, medical expenses, or other pecuniary loss. However,
to the extent necessary for support, payments for the loss of future earnings are


Notice that there are monetary limitations on several of the bankruptcy exemptions. It is important to emphasize that these limits apply to the debtor's equity in the property. If the property is worth more than the exemption and the liens, then a chapter 7 trustee may liquidate the property for the purpose of realizing the excess value over and above the exemption and any liens on the property for the benefit of the estate.

Dana A. Ehrlich

Dana A. Ehrlich is a bankruptcy specialist who lives and works in San Angelo, Texas. He has lived in the Concho Valley and San Angelo, Tom Green County for many years. His practice is primarily consumer bankruptcy law and he is a board certified bankruptcy specialist for Chapter 7 and Chapter 13. He may be reached at 325-655-5351 or at

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