If you disobey federal bankruptcy law, you could face serious civil and even criminal penalties. Of course, if you follow the advice of the Boy Scout motto – “Be Prepared” – and work within bankruptcy and state laws to shield your assets, you may save thousands. For many potential debtors, the difference between success and failure is their willingness to rely on the advice of dedicated, informed professionals.
In Texas, the homestead exemption is a particularly valuable tool in a would-be debtor’s tool kit. In a city, a debtor may keep a home of up to 10 acres without forfeiting it to his or her creditors. In rural areas, the homestead exemption applies to a primary residence, including surrounding land, of up to 100 acres.
What distinguishes rural from urban property for the purposes of the Texas homestead exemption? As established in Texas Property Code § 41.002(c), a homestead is considered urban if the property is located within the limits of municipality and served by police and fire protection and at least three of the following city services: electricity, natural gas, sewer, storm sewer, and water.
If personal bankruptcy is something that you may need to manage some time in the years ahead, it may be wise to be prepared for every contingency and plan for how to best shield your assets. Living on a rural homestead may be one of a number of strategies to consider. To find out more about how to best protect your legal interests in the event of a financial downturn, talk to the professionals and attorneys at Fears Nachawati.