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Underwater? Move to El Paso.
Desperate times call for desperate measures. If you no longer want to keep paying your underwater mortgage, but you want to protect your assets, there's always Texas.
That's right. The state that George W. Bush will soon call home again will welcome you with open arms, job prospects, and some of the most generous bankruptcy exemptions the country. If you have a lot of debt and don't want to pay it, Texas wants you.
Bankruptcy attorneys in Texas are eager to help you shelter your assets from Uncle Sam, Bloomberg reports today. Texas bankruptcy filings involving delinquent out-of-state mortgages rose by a third in the past year.
"Texas is an extremely friendly place to live if you owe money and do not want to pay,'' Marjorie Britt, a bankruptcy attorney with Britt & Catrett in Houston told Bloomberg. "If you have a lot of money and even more debt and want to shelter your assets, you can live fairly normally.''
New state motto: Don't Mess With Texans' Debts.
Here's how it works. Abandon your home and move to Texas. After two years, you can file for bankruptcy and mail in your keys to your old home. Under state laws, your creditors can't come after garnished wages, alimony, child support, pensions, life-insurance policies, annuities, IRA and 401(k) retirement plans, or as much as $240,000 per child in a 529 college-savings account. They also can't come after your new Texas home, unless it's on more than ten acres in city limits or more than 200 acres in rural areas.
Or, if you don't want to file for bankruptcy, or you don't want to live there for two years before sending your bank some jingle mail, you can protect your assets under the Texas Property Code. The state laws were established to help early Texas settlers with debts.
Britt, the bankruptcy attorney, isn't shy about how she helps her clients' shelter assets, either. She says she once told a client to install turn signals and license tags on a $40,000 bulldozer to qualify it as a street-legal vehicle.
"The court never even questioned it,'' Britt said of the $40,000 bulldozer. "You wouldn't want to drive it to the grocery store, but you could've.''
by Megan Barnett
