A debtor filing bankruptcy in Texas may choose either the Texas exemptions or an alternative set of exemptions in the Bankruptcy Code. To claim exemptions, the debtor must list the exempt property in the debtor’s schedules. Unless a party in interest timely objects to the debtor’s claimed exemptions, the property claimed exempt on the debtor’s schedules is exempt. It is generally not worthwhile to object to a claimed exemption, except in extraordinary circumstances (e.g., where debtor claims a 700 acre exemption for his or her rural homestead).
The following personal property can qualify as exempt:
•home furnishings, including family heirlooms
•provisions for consumption
•farming or ranching vehicles and implements
•tools, equipment, books, and apparatus, including boats and motor vehicles used in a trade or profession
•wearing apparel
•jewelry not to exceed 25 percent of the aggregate limitations
•two firearms
•athletic and sporting equipment, including bicycles
•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 nonlicensed person
•the following animals and forage on hand for their consumption:
o two horses, mules, or donkeys and a saddle, blanket, and bridle for each
o 12 head of cattle
o 60 head of other types of livestock
o 120 fowl
•household pets
•the present value of any life insurance policy to the extent that a member of the family of the insured or a dependent of a single insured adult claiming the exemptions is a beneficiary of the policy
•Unpaid commissions for personal services not to exceed 25 percent of the aggregate limitations prescribed below.
Personal property, as described above, is exempt from garnishment, attachment, execution, or other seizure if:
•the property is provided for a family and has an aggregate fair market value of not more than $100,000, exclusive of the amount of any liens, security interests, or other charges encumbering the property
•the property is owned by a single adult, who is not a member of a family, and has an aggregate fair market value of not more than $50,000, exclusive of the amount of any liens, security interests, or other charges encumbering the property.
The following personal property is also exempt from seizure and is not included in the aggregate limitations prescribed above:
•current wages for personal services, except for the enforcement of court-ordered child support payments
•professionally prescribed health aids of a debtor or a dependent of a debtor
•a person’s right to the assets held in or to receive payments, whether vested or not, under any stock bonus, pension, profitsharing, or similar plan, including a retirement plan for self-employed individuals, and under any annuity or similar contract purchased with assets distributed from that type of plan, and under any retirement annuity or account described by Section 403(b) of the Internal Revenue Code of 1986, and under any individual retirement annuity, including a simplified employee pension plan, is exempt from attachment, execution, and seizure for the satisfaction of debts unless the plan, contract, or account does not qualify under the applicable provisions of the Internal Revenue Code of 1986. A person’s right to the assets held in or to receive payments, whether vested or not, under a government or church plan or contract is also exempt unless the plan or contract does not qualify under the definition of a government or church plan under the applicable provisions of the Federal Employee Retirement Income Security Act of 1974. The IRA component is capped at $1,000,000.
•Insurance benefits to the debtor who is the designated beneficiary of an insurance policy. “Insurance benefits” includes “all money or benefits of any kind, including policy proceeds and cash values, to be paid or rendered to the insured or any beneficiary under any policy of insurance issued by a life, health or accident insurance company, including mutual and fraternal insurance companies, or under any plan or program of annuities and benefits in use by any employer.” The exemption protects the insurance benefits from seizure to pay the debts of the beneficiary and the insured even if (i) the insured has the right to change the beneficiary or (ii) the insured or the insured’s estate is a contingent beneficiary. This exemption does not apply to a creditor seeking to:
o recover premium payments made in fraud of creditors; or
o to foreclose on its security interest in a policy or its proceeds pledged to secure the debt of the insured or beneficiary.
If the Bankruptcy debtor chooses the Texas exemptions, insurance benefits are fully exempt in a bankruptcy proceeding of either the insured or the beneficiary.