If you have been thinking about asset protection, or were advised by someone that it may be wise for you to consider this type of protection, you may wonder what asset protection entails. Asset protection is a type of financial planning that protects assets from creditor claims. Businesses and individuals use asset protection as a way to limit what creditors can access.
One type of asset protection is homesteading. Homesteading laws provide ways to protect your home against creditors trying to collect an unpaid debts. As a homeowner in Texas, you qualify for an automatic monetary exemption. This means that if a creditor files a claim against your property, you are guaranteed the monetary exemption.
You also have the option to file a formal declaration of homestead in order to gain additional protection. For example, if a creditor wins a judgment against you, it can place a lien on all of your valuable assets, including your home. Without initiating homestead protection, you lose the ability to sell your home voluntarily and have full control over the assets from the sale. Homesteading also provides your family members protection during a trustee sale. Without formally declaring the homestead exemption, the proceeds of the sale go directly towards payment of the debt.
The formal declaration of homestead must be filed before any creditor wins a lien. It’s also important to note that homestead laws do not shield you from home foreclosure or other mortgage debt issues.
If you are interested in learning more about homesteading or other ways to protect your assets, contact us. We will be happy to sit down with you and provide you answers on how you can ensure your assets remain with you.