Like I tell my clients, unless you owe your employer money, they are not listed in the bankruptcy schedules that are filed with the Bankruptcy Court, and are not generally notified, just because you file bankruptcy. Employers can check your credit reports, but in my experience only do that in connection with the hiring process, and they must obtain your written consent to do so.

Now that being said, if you file Chapter 13, at least here in the Houston area, the Southern District of Texas, if you are a “W-2 employee” and have taxes withheld from your check, you must have your Chapter 13 plan payment deducted from your paycheck. So, your payroll office would have to know that you filed bankruptcy; they are the ones that are sent the “wage order” from the bankruptcy court.

Don’t be overly concerned about such payroll deduction or wage orders in the event that you have to file Chapter 13. If you work for a large company, many of your co-workers have all kinds of deductions coming out of their paychecks such as garnishments for child support, student loans, IRS wage levies, chapter 13 plan payments, etc.  It’s likely not as big a deal as you think.

If you are in a small office or you have a very responsible position, it is possible for us to ask the Bankruptcy Court to “waive” the requirement of having a wage order, but it must be unusual circumstances for the judge to consider doing it. A far higher number of Chapter 13 cases are successfully completed, if the debtor has a wage order, with the Chapter 13 plan payments being deducted from their paycheck.

Moreover, employers are not allowed to fire you, or discriminate in employment against you, solely because you filed bankruptcy, or didn’t pay a debt that is dischargeable (cancellable) under the U.S. Bankruptcy Code.

The only possible exception that I know to that one is, if you need a security clearance for your job. If you have such a job, of course you should inform your superiors of any change in your financial situation. I have had them investigate clients that have filed bankruptcy before, and cleared them and allowed them to continue with their classified work, so I know filing bankruptcy doesn’t necessarily mean that you will lose your job, even if you need a security clearance.

A Rocky Mountain Trail Near Tucson, AZ

If you are a Texas resident, and file Chapter 7 bankruptcy, usually most or all of your property can be claimed as “exempt” or safe from your creditors, which are represented by your Chapter 7 Trustee.

Texas was settled by folks with debt troubles. Many of them came from Tennessee or other states, just one step ahead of their creditors. Some wrote “GTT” for “Gone To Texas” in chalk on their cabin doors, so their creditors would know not to bother to pursue them. So our laws are written so that most or all of what most people own, can be claimed as exempt.

For example, your Texas homestead can consist of 10 acres of land plus all improvements, if in an urban area. In a rural area, you can exempt up to 100 acres of land plus all improvements, or 200 acres if a family. You can claim as exempt up to $30,000 of personal property if single, $60,000 if a family. The property must be certain listed property in the law, but it consists of most everything that most people own, including furniture and household goods, clothes, vehicles (just the “equity” or value over any loans counts towards the exemption), even two guns.

Also, a Texans’ retirement plans, IRA’s, whole life insurance and annuities can be claimed as exempt. Frankly, you can exempt a lot of property in Texas. So much so that some people move to Texas to take advantage of our exemptions. This is limited somewhat now by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which provides among many other things, that to use a state’s exemptions, you must live in that state for 2 years, and to exempt more than $136,000 in home equity, you must have owned the property for more than 1215 days (about 3 yrs and 4 months).

But to keep property, you must pay any valid liens on the property. If you have a mortgage on your house or a loan on your car, you must continue to pay those loans or the lienholder can eventually get permission to repossess or foreclose, after getting permission from the Bankruptcy Judge, or after the bankruptcy is over. You may also need to sign a “Reaffirmation Agreement” to keep such secured items.

If you are considering filing bankruptcy, hire a good lawyer. Hire a lawyer that is experienced in these cases. I have been practicing consumer bankruptcy law in Houston Texas since 1982. I am Board Certified in Consumer Bankruptcy Law by the Texas Board of Legal Specialization. You can look me up at www.tbls.org. To make an appointment, please call my office at 713-772-8037, or make an appointment at my web site at www.jthomasblack.com by clicking on the red button on the upper right-hand side of any page.

It's Rough Country Outside of Tucson, Arizona- But Beautiful

I hear this one quite a bit, people are afraid that a bankruptcy  Trustee or someone from the Court will come in their house, and take their TV or their furniture or their microwave. I’ve never had it happen yet here in Texas, and I’ve filed about 8,000 cases.

In Texas, it’s possible to claim as “exempt” or safe from creditors, up to $30,000 worth of personal property if you are single, or $60,000 if you are a couple. “Personal property” is everything that you own that is not land or real estate like a house. So it includes cars and trucks, but it only refers to the equity in your property.

So if you own a pickup truck or SUV, and it’s worth $15,000, but you owe $16,000, there is no equity in it at all that counts toward the $30,000/$60,000 exemption limits.

Very few people that come in to meet with me have any non-exempt personal property. And that makes sense; if you are having money problems, you will usually have already spent down your savings and investments, and sold your truly valuable items to raise more cash to pay down debts.

So generally, if you have lived in Texas for at least two years so that you can claim the exemptions that are available under Texas law, you don’t have to worry about a bankruptcy Trustee coming into your house.

Now I understand it is different in other state. I read once that in Florida, it is common for Trustees to go to people’s houses and take an inventory or inspect the property, and that is because (at least at that time) Florida’s exemptions were very low, like $1000. If you filed bankruptcy, all you could keep was $1000 worth of stuff.

You either had to let the Trustee take all the rest of your personal property like furniture and appliances, or you had to “buy back” your items from the Trustee. That just doesn’t seem right; you’re broke, and you are expected to live in an empty house or apartment? If the Florida exemptions are still that low, they ought to change them.