Bankruptcy in Other States

Texas has the most liberal exemption laws in the United States.

We represent clients in other states and we represent clients who are moving into Texas or out of Texas.

Filing bankruptcy in a different state can make a significant difference because each state has its own list of exempt property (exempt property is property that the debtor can keep. States with a generous list of exemptions permit debtors to keep more property through a bankruptcy than states with a "stingy" list of exemptions.

Texas has the most generous list in the United States. For instance, Texas permits debtor to keep his or her homestead, no matter how much it is worth. And Texas gives debtors a choice between the state list of exemptions and and a special list that applies only to debtors filing bankruptcies.

This Texas exemption list is a safety net to the Texas entrepreneur and it creates a most favorable climate for investment and new businesses. Because an entrepreneur knows that if he takes a risk and his business fails, he will keep his family home, the contents of his home, his car and his retirement (there are some exceptions). This is one reason why Texas is a wealthy state: it encourages business ventures by protecting the entreprenure's family. And the argument that lenders will not lend in an environment like Texas is simply not true.

Congress has made efforts to restrict the benefit of Texas exemption laws by enacting time limitations for people who move into Texas. But sometimes those efforts have the opposite effect. For instance, Tennessee is a stingy state. If a business fails in Tennessee, an entreprenur can lose his family home or family farm, much of his furniture, his cars and other assets. But a Texas resident who moves to Tennessee retains Texas rights in bankruptcy for a certain period of time. In one case a Texas resident filed bankruptcy in Texas after he had moved to Tennessee. We were able to exempt his family farm in Tennessee by using Texas bankruptcy laws that were not available to him in Tennessee. The significance, of course, is that the Texas bankruptcy discharged all of his Tennessee creditors while he kept his family farm.

The story is more complicated for those who are moving into Texas from another state, but ultimately, the Texas exemptions will apply to those people, too.