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The Challenge of Exempt Property in Texas Judgment Collection
One of the reasons it's a lot more tough to collect a judgment in Texas is that we have a somewhat liberal lineup of property that is exempt from seizure and sale under a writ of execution. On the other hand, it's definitely not impossible to collect a judgment in Texas. It's just more challenging than in the majority of other states.
General Rule for Writ of Execution
The general rule is that a Texas judgment debtor's a property is subject to a writ of execution if it's not exempted by the Texas constitution, a statute or other rule of law. Section 42 of the Texas Property Code then lists specific groups of property that are actually exempt from a writ of execution in Texas. These are broad categories of exemptions. Each group is worthy of further explanation and will be the topic of future articles. In the meantime, understand that these classifications represent broad areas of exemptions. It's also worthy to note that there are exceptions to these exemptions if the financial obligation being collected is for a child support responsibility.
With that in mind, the following broad kinds of assets are actually exempt from an execution to satisfy a judgment:
1. The homestead
2. Personal property with a net fair market value up to $ 60,000 for a family and $ 30,000 for a single adult.
The "net fair market value" ultimately indicates that you will need to establish the fair market value and then take off from that amount the dollar amount of liens, if any, on the property.
3. Current wages for personal services
This is the one which generally trips people up in Texas due to the fact that it's unique from a lot of other states. And so, for sake of complete clarity, you have to be aware that Texas does not permit you to garnish your judgment debtor's wages in order to pay your judgment. There is, on the other hand, an exception for the enforcement of court-ordered child support.
4. Professionally prescribed health aids for the judgment debtor or a dependent of the judgment debtor
5. Certain retirement benefits and funds
Some of these retirement benefit exemptions are worthy of an article in their own right. Suffice it to say for now that retirement benefits are typically "off limits" to a levy and execution in Texas.
6. Workers' compensation payments
7. Cemetery lots held for purposes of sepulcher
8. Property that the judgment debtor has pledged, assigned or mortgaged as security for a debt.
Typically, if the judgment debtor has property that has not been given as security for a personal debt, that property should be levied first. But, if the only property he owns has been presented as security, you can levy on that property and sell it under a writ of execution. But, you can only sell the interest owned by the judgment debtor. What this effectively means is that you must ensure the property fetches an adequate sum in order to pay off the collateralized note on the property, the expenses of the sale and then the remainder is applied to the judgment.
9. Assets held by a trustee in a spendthrift trust for the benefit of the judgment debtor
10. Insurance benefits
11. Alimony, support, or separate maintenance payments the judgment debtor gets as support or the support of dependents
12. A sacred bible or other book being composed of sacred writings of a religion confiscated by a creditor aside from a lessor of real property who is exercising the lessor's contractual or statutory right to take possession of personal effects after an occupant breaches a lease contract for or abandons the real estate; and
13. Judgments of Texas courts.
If your judgment debtor has a viable judgment against another individual or business and is actually receiving monthly payments on that judgment, you won't be able to levy and execute on that judgment. Nevertheless, you may well be able to obtain a turnover order to get to those monthly payments or the dollar value of that judgment.
This catalog of broad areas of exemptions is a nonexclusive checklist. Nevertheless, this checklist does exemplify those areas you will likely encounter if you are actually seeking to use a Texas writ of execution against an individual judgment debtor.
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About the Author
Harvey L. Cox is a Texas attorney and founder of the Texas Judgment Collection Center. For more information, go to http://TexasJudgmentCollection.com.
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Date: Wed, 5 Dec 2012 -
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