The Woodlands TX Bankruptcy Attorney » exempt property

Why You Don’t Hide Assets

Rich Shea — Thu, 25 Nov 2010 12:56:51 +0000

Intentional or not, some people that start that bankruptcy process try to hide assets. This is usually done based on the belief that if you don’t tell anyone about it they won’t find it. That is a flawed assumption for many reasons which we will get into another time, but for now let’s focus on the bottom line. Are you really protecting your assets or risking assets when you attempt to hide something?

Myth – you have to lose all of your property in bankruptcy.

Fact – you only lose your non-exempt property through the bankruptcy process.

The first rule of preserving property with an exemption is that your Woodlands Bankruptcy Attorney has to know it exists. If your bankruptcy attorney does not about a specific piece of property and does not set aside an exemption for it then you risk losing it to the bankruptcy trustee. Clearly this is not the result most people intend which is why it is absolutely critical that you tell your bankruptcy attorney everything that you own.

Many of the people I represent through the bankruptcy process can keep all of their property with strategic use of their bankruptcy property exemptions. Anything they do not tell me about at the outset may be impossible to protect later on. This is why you do not attempt to hide assets.

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2010 Federal Bankruptcy Exemptions

Rich Shea — Tue, 22 Jun 2010 21:05:32 +0000

Every three years the federal bankruptcy exemptions are adjusted for inflation. The adjustment for 2010 applies to cases filed on or after April 1,2010. The federal bankruptcy exemptions are:

Homestead: $21,625
Vehicle: $3,450
Household Goods: $11,525 total with no single item exceeding $550
Jewelry: $1,450
Wild Card: $1,450
Tools of the Trade: $2,175
Unmatured Life Insurance: $11,525
Personal Injury Claims: $21,625
IRA: $1,171,650

Remember these are only the federal exemptions. Texas also has its own set of bankruptcy exemptions which you may be entitled to keep. Exactly which set provides you with the most protection depends on your unique circumstances. Your bankruptcy lawyer can review your situation and help you pick to best exemption rules.

Get Help

The Shea Law Firm is here to help you get through the bankruptcy process and protect your rights to the fullest extent. Don’t risk losing property you may be able to keep. Call (832) 592-7913 and speak with a Woodlands bankruptcy lawyer today.

LoneStarBankruptcy.com provides the latest news and information on Chapter 7 and Chapter 13 bankruptcy in the Southern District of Texas. The Federal Bankruptcy Court for the Southern District of Texas covers many communities including: Houston, Spring, Conroe, The Woodlands, Montgomery County, and Harris County. If you need legal assistance with a personal bankruptcy matter speak with a local bankruptcy attorney today.

Why You Need to Choose Texas or Federal Exemptions Carefully

Rich Shea — Mon, 17 May 2010 21:16:48 +0000

Every Woodlands Bankruptcy filer faces a choice to use the Texas or Federal Bankruptcy property exemptions. They each have their pros and cons. Exactly which exemption rules are better depends entirely on your unique case. Once you choose to use either the Texas or Federal Bankruptcy exemptions you may not be allowed to change your choice later on even if your circumstances change after your case is filed. The wrong choice can result in you losing property that you may have been able to keep through Bankruptcy. That is what happened to the Schellenbergs. Do not let it happen to you, call (832) 592-7913 to speak with a Woodlands Bankruptcy Attorney today.

Background

The Schellenbergs filed a Chapter 13 Bankruptcy petition on February 2, 2009. The purpose of the filing was to protect from foreclosure a horse ranch that the Schellenbergs had built that was to serve as their homestead and horse training business. The Schellenbergs had borrowed $772, 000 from First State Bank of Central Texas (“FSBCT”) on or about August 10, 2006. On the date of their bankruptcy petition, the Schellenbergs owed the full amount of the Note plus accrued interest in the amount of $802, 045.06.

At the hearings on FSBCT’s Motion for Relief from Stay, Mrs. Schellenberg testified that it was her life’s dream and ambition to operate a horse business. She further testified that the Chapter 13 filing was to halt foreclosure and to find alternative financing. The Schellenbergs were unable to find alternative financing and the Court granted FSBCT’s Motion for Relief from Stay which allowed FSBCT to conduct a foreclosure on August 4, 2009.

On or about March 5, 2009, the Schellenbergs filed their Schedules. The Schellenbergs’ homestead property was listed as exempt with a value that exceeded the debt by roughly $575,000. The Schellenbergs claimed state exemptions and, as such, the homestead property was completely exempted.

After FSBCT conducted its foreclosure, the Schellenbergs converted their case to Chapter 7 on September 10, 2009. The Schellenbergs then filed Amended Schedules on October 30, 2009. The Schellenbergs switched the basis of their exemptions to federal exemptions. Notably, the Debtors did not list their homestead property or its purported equity in their Amended Schedules because the property had been foreclosed.

Because the Schellenbergs had switched from state to federal exemptions upon conversion to Chapter 7, and also because the Schellenbergs no longer claimed a homestead exemption, the Schellenbergs were able to exempt property after conversion to Chapter 7 that they did not exempt when they filed Chapter 13. Specifically, the Schellenbergs now exempted four checking and one savings account in the aggregate amount of $3,068.55. Further, they have exempted a personal injury award with a stated recovery of $15,000.10 and some miscellaneous items in the amount of $225.

The Objection

The Chapter 7 Bankruptcy Trustee filed his Objection to Debtors’ Amended Schedule C Property Claimed or Exempt on November 25, 2009. The Chapter 7 Trustee does not dispute the Debtors’ right to file amendments to their Schedules. That said, the Trustee argues that the Schellenbergs have already removed real property from the bankruptcy estate by exempting the real property under Section 522(b)(3). In doing so, the Schellenbergs also removed the purported equity of over $568,000 in the property. The fact that the property was foreclosed does not change the property’s exempt status. Now the Schellenbergs wish to exempt even more property from the estate by using federal exemptions. The Trustee asserts that switching exemptions is prejudicial to creditors.

The Response

The Schellenbergs contend that there is no prejudice to the Chapter 7 Trustee because they claim that the Fifth Circuit focuses on whether there is prejudice to a creditor who relied on the Debtors’ exemptions before conversion. As such, because the Chapter 7 Trustee was not a party during the Chapter 13 bankruptcy, there can be no detrimental reliance by the Chapter 7 Trustee. Moreover, the Debtors contend there is no prejudice to the Chapter 13 Trustee because she cannot liquidate property.

Also, the Debtors that contend even if the Court were to analyze the matter from the perspective of a hypothetical unsecured creditor, there is still no prejudice because it was unlikely that the Debtors could have sold their homestead for the stated equity. Moreover, FSBCT did foreclose on the property, leaving no equity to anyone. The Debtors also contend that there has been no showing that any party/creditor detrimentally relied on the Debtors’ initial exemptions such that they are prejudiced by the amended exemptions.

Analysis

The Court finds the Chapter 7 Trustee is correct in his arguments. The Fifth Circuit held in In re Williamson that exemptions, for purposes of when they are determined in a case converted from Chapter 11 to Chapter 7, are determined on the petition date. The Fifth Circuit did, however, recognize that amendments under Rule 1009 are liberally construed if there was no bad faith or prejudice to creditors. Similarly, in In re Sandoval the Fifth Circuit held that a homestead exemption in a case converted from Chapter 13 to Chapter 7 is determined on the petition date.

As the Trustee points out, exemptions are determined on the date of petition, not conversion. Further, although Rule 1009(a) does allow for liberal exemptions, exemptions can only be allowed under applicable law. The Schellenbergs elected to file Chapter 13 and protect their perceived equity in their homestead. The Chapter 13 case failed. The conversion to Chapter 7 affords the Chapter 7 Trustee the ability to administer non-exempt assets. As such, the Schellenbergs ‘ cash, personal injury award, and miscellaneous personal property are subject to administration. The Schellenbergs are incorrect in their assertion that there is no prejudice – both the Chapter 13 and 7 Trustees relied upon the original claim of exemptions as did the creditors. To allow the Schellenbergs to amend their exemptions gives them the ability to exempt more property than was originally claimed and was originally exempt. The Court granted the Trustee’s Objection.

Get Help

The Woodlands Bankruptcy Attorney is here to help you get through the bankruptcy process and protect your rights to the fullest extent. Don’t risk losing property you may be able to keep. Call (832) 426-393 and get help today.

In re Schellenberg, 09-10272-CAG

Texas Bankruptcy Exemptions – Jewelry

Rich Shea — Wed, 06 Jan 2010 12:39:14 +0000

Exempt property is the property you can keep in a Chapter 7 case without having to turn over to the bankruptcy trustee. Any property you have that your Conroe Bankruptcy Attorney does not claim as exempt or that does not qualify as exempt is subject to being turned over to the bankruptcy trustee and liquidated to repay debts. Texas law provides for several property exemptions. Today we will examine the exemption for jewelry.

Sections 42.001(a) and 42.002(a)(6) of the Texas Property Code allow an exemption for jewelry not to exceed 25 percent of the aggregate limitations prescribed for exempting personal property. As of this date, the personal property exemption limit is $30,000 for an individual or $60,000 for an individual that qualifies as head of a family unit.

How Does the Jewelry Exemption Work?

In a case where you can exempt $30,000 of exempt personal property, the jewelry exemption is limited to $7,500.

In a case where you can exempt $60,000 of exempt personal property the jewelry exemption is limited to $15,000.

Both of these figures are aggregate amounts, meaning all of your jewelry combined cannot exceed the above dollar amounts. It is not a per item exemption.

Get Help

Your Conroe Bankruptcy Attorney is here to help you get through the bankruptcy process and protect your rights to the fullest extent. Keep all the property you are entitled to keep with your exemptions. Get help today.

In re Fink, Case No. 07-36827-H3-7 (Bankr. S.D. Tex. 9/17/2009)

Bankruptcy Exemptions: Home

Rich Shea — Sun, 15 Mar 2009 19:09:53 +0000

In every Woodlands Bankruptcy case there is a long list of “exempt property” that you are entitled to keep. In this post we will take a look at the most important exemption for many Woodlands Bankruptcy filers, the homestead exemption.

Put simply, Texas law protects your homestead with very few restrictions. There is no limit to the value of your home. Your Montgomery County Bankruptcy Attorney can protect your $500,000 home just the same as your $100,000 home in Bankruptcy.

There is a limitation on the actual size of your homestead that you can protect. If your home is located in an “urban” area (which is virtually very property except very rural locations) your home can not exceed 10 acres.

If you need the relief that only Bankruptcy can provide, speak with a Woodlands Bankruptcy Attorney today and get control over your debt.