Sections of Texas Bankruptcy Code
Property 42.0021
6243e(5), 6243e.1(12), 6243e.2(12), 6228f(8), 6243g
6243d-1(17), 6243j(20),6243g-1(23B)
Government 811.005
Many people considering bankruptcy hesitate because they're afraid their retirement income or savings can be seized by creditors. Whether you're filing a Chapter 7 or Chapter 13 bankruptcy your retirement income or savings may be protected under the Texas bankruptcy exemptions if it's a qualified plan.
An exemption qualified retirement plan is a tax-deferred retirement plan created by employers for their employees. This includes 401(k)s, 403(b)s, profit-sharing and money purchase plans, IRAs (including SEP and SIMPLE plans), as well as defined-benefit plans. The exemption may also apply to social security benefits depending on the type of debt owed.
This bankruptcy exemption does not forbid the debtor from borrowing from his/her retirement plan and granting a lien on his/her interest in the plan to secure a loan. For example: If you took out a home loan using your retirement plan as collateral and then defaulted on the loan, your retirement plan may not enjoy this exemption.
Retirement plans for the following are exempt under both Federal and Texas bankruptcy law:
- Teachers
- Texas County and District employees
- ERISA- (Employee Retirement Income Security Act)
- Law enforcement officers, firefighters, emergency medical personnel survivors
- Municipal employees & elected officials, state employees
- Police officers
- Judges