Bankruptcy Secrets
New Bankruptcy Homestead Exemption
Under the old bankruptcy law the states set the amount of money you could set aside for your residence when you wipe out old debts through bankruptcy. If you were lucky enough to live in one of the states with a high exemption, you could shield much more money from the bankruptcy court. In Texas the homestead exemption used to be unlimited (as long as your home was less than 100 acres in size).
Under the new federal bankruptcy law the states with higher homestead exemption limits have been reduced to $125,000 unless you've owned the home and resided there for a minimum of 1,215 days (3.3 years).
If you've transferred equity from an earlier property, which was acquired more than 3.3 years ago, that equity will usually be exempted also. Ask your lawyer.
This new lower exemption
only applies to those states that have higher homestead exemptions that
include: Arkansas,
California, District of Columbia, Florida, Iowa, Kansas, Louisiana, Massachusetts,
Minnesota, Nevada, Oklahoma, Rhode Island, South Dakota and Texas.
