Debt collection follows a combination of state and federal law, and Texas state law is unusually favorable to debtors. Specific important pieces:
1. Your primary residence is protected from forced sale to satisfy general creditors, up to 10 acres (urban) or 100 acres (rural).
2. Garnishment of wages is limited to certain special circumstances, such as nonpayment of taxes or child support.
3. IRAs have unlimited protection from creditors (other states have a cap).
>And how can you put everything in retirement account?? 401k is 19k/year and IRA is 5k? What do you do with the rest of your money?
Home equity is a very significant part of this. If you borrow $300k to buy a $400k home, the $100k you have tied up in your house is protected from creditors. If you have an extra $50k you want to save, you pay down your mortgage more aggressively and creditors can no longer come after it.
Oh, also, from reading into things, it looks like if you buy a 2 to 4 unit house, then even the non-owner-occupied units remain protected. So you can extend things somewhat that way by having a more expensive home that cashflows.
>Do you setup and LLC or trust?
LLCs are more for business-related liabilities, and trusts are weird and expensive enough that I haven't looked into them. Besides which, there's a perfectly reasonable alternative to a trust - annuity and insurance products. Both their value and payments to you are exempt from attachment and seizure in Texas, again with the exception of child support payments and "fraudulent transfers" made after incurring the debt. So essentially, if an insurance company is holding your money and giving it back to you in a structured way, creditors have a really hard time getting at it.
You can likely actually swing it between accessing IRA funds, having a paid-off duplex/triplex/quadplex, and purchasing an annuity or the like. Wouldn't lose all that much efficiency, depending on things.
Debt collection follows a combination of state and federal law, and Texas state law is unusually favorable to debtors. Specific important pieces:
1. Your primary residence is protected from forced sale to satisfy general creditors, up to 10 acres (urban) or 100 acres (rural).
2. Garnishment of wages is limited to certain special circumstances, such as nonpayment of taxes or child support.
3. IRAs have unlimited protection from creditors (other states have a cap).
>And how can you put everything in retirement account?? 401k is 19k/year and IRA is 5k? What do you do with the rest of your money?
Home equity is a very significant part of this. If you borrow $300k to buy a $400k home, the $100k you have tied up in your house is protected from creditors. If you have an extra $50k you want to save, you pay down your mortgage more aggressively and creditors can no longer come after it.
Oh, also, from reading into things, it looks like if you buy a 2 to 4 unit house, then even the non-owner-occupied units remain protected. So you can extend things somewhat that way by having a more expensive home that cashflows.
>Do you setup and LLC or trust?
LLCs are more for business-related liabilities, and trusts are weird and expensive enough that I haven't looked into them. Besides which, there's a perfectly reasonable alternative to a trust - annuity and insurance products. Both their value and payments to you are exempt from attachment and seizure in Texas, again with the exception of child support payments and "fraudulent transfers" made after incurring the debt. So essentially, if an insurance company is holding your money and giving it back to you in a structured way, creditors have a really hard time getting at it.