Texas retirement exemptions are available for both Chapter 13 and Chapter 7 bankruptcy filers.  Retirement exemptions can protect your retirement savings from creditors’ claims.  If your retirement plan qualifies, it may be protected under the Texas bankruptcy code.  Here are the guidelines to determine if your retirement plan qualifies for the exemption.

A qualified retirement plan is a tax-deferred plan created by employers for their employees.  Plans that qualify include 401(k), 406(b), profit sharing plan, IRAs, SEP-IRAs, SIMPLE plans, money purchase plans, and defined benefit plans.  Depending on the type of debt you owe, the Texas retirement exemption may also apply to social security benefits. This exemption does not prohibit you from borrowing from your retirement plan and allowing a lien to be placed on your interest in the retirement plan (in order to secure a loan).

There is one caveat to the Texas retirement plan exemption.  It involves defaulting on a loan for which your retirement plan was used as collateral.  For example, let’s assume that you took out a home loan and used your retirement plan as collateral (security) for the loan.  If you default on the home loan, your retirement plan may not be allowed to serve as an exemption in your bankruptcy case.

Retirement plans for the following groups qualify for the Texas retirement exemption under both federal and Texas bankruptcy law: teachers, judges, police officers, municipal employees, elected officials & state employees.  Retirement plans for teachers, Texas County, Texas district employees, law enforcement officers, firefighters, and emergency medical personnel also qualify under both Federal and Texas bankruptcy law.