Keeping Your Car During Bankruptcy: What Texas Law Requires

Texas law permits individuals filing for bankruptcy to keep their vehicles through the use of exemptions, according to Austin Bankruptcy Lawyers.

Under Texas exemption laws, up to one vehicle per licensed family member can be protected. While federal law sets a motor vehicle exemption value at $3,775, Texas law provides broader protection, safeguarding the entire value of a vehicle per family member.

In a Chapter 7 bankruptcy, all of the debtor's property becomes part of the bankruptcy estate. Exemptions allow individuals to protect certain assets from being sold to pay creditors. Besides vehicles, Texas law allows for exemptions on items like sporting goods and household furnishings.

For those pursuing Chapter 13 bankruptcy, which is designed for individuals with sufficient income to repay some of their debts, keeping a car is also possible. This chapter allows debtors to catch up on car loan payments over a 3-to-5-year repayment plan, preventing repossession during this period.

Austin Bankruptcy Lawyers provides counsel on bankruptcy proceedings, assisting clients in determining which assets, including vehicles, they can retain under either Chapter 7 or Chapter 13 filings.