When you struggle with debt, you may wonder if you will lose everything to set your finances right. This is especially true for people who have invested in their family home. While you may be concerned about losing your home, the bankruptcy process may actually allow you to protect your home from creditors.
What is a homestead exemption?
Federal bankruptcy law allows people to claim certain property as “exempt” and off-limits to creditors. This includes a variety of personal property, including the clothes you wear, one vehicle, family heirlooms, home furnishings, livestock and your homestead.
When you own a piece of land and live there, the government will consider that property your homestead, and it will be protected from creditors in the bankruptcy process. Other property that is not your primary residence, however, will not have the same protection.
Texas offers homeowners greater flexibility.
Unlike many states, Texas does not limit the amount of equity you can have in a homestead, except if you have moved into Texas from another state but have not lived in Texas for the time period required by Bankruptcy law. This means that the bankruptcy process can still protect more valuable homes and property.
Texas does outline a few limitations to the amount of land that can be considered your homestead. If you live in a city, town or other community, your homestead is limited to ten acres. In rural areas, your homestead is limited to 100 acres for an individual or 200 acres for a family. Larger acreages may require you to file a homestead declaration.
If you wonder whether bankruptcy could offer you necessary debt relief and protect your home from creditors, consider speaking to an experienced bankruptcy attorney to explore your options. The homestead exemption in the bankruptcy process could help you protect your home while lifting the burden of debt from your life.