Struggling Homeowners Move To Texas To Escape Economic Problems
By ABC-7 Reporter, Marissa Monroy
EL PASO– History buffs may remember the phrase, G.T.T. or “Gone to Texas.” The slogan dates back to the old west, when people looking to escape debt fled their homes and settled in Texas.
Bankruptcy laws in the Lone Star State remain friendly to people who owe money, making cities like El Paso a very attractive place to live.
“Texas has an unlimited homestead exemption which means that it doesn’t matter how much equity you have in your home, the creditors can’t force you to sell it to pay your debt,” bankruptcy attorney Cheryl Lay said.
According to the financial publication “Bloomberg,” Texas bankruptcy filings involving delinquent out-of-state mortgages increased by at least a third in the past year.
“People are just walking away from their houses,” Lay said. “But people still owe these huge mortgages so they’re just walking away and leaving and giving the key back to those lenders and moving somewhere else.”
People taking advantage of this loophole forced legislatures to change the law. In 2005, the bankruptcy code was amended so troubled borrowers could not immediately seek refuge in Texas.
“You now have to live in the state of Texas for two years in order to use the state exemptions,” Lay said. “If you move to Texas within that two-year period and file for bankruptcy, you have to use the exemptions from the state you came from.”
