Texas Bankruptcy Exemptions: What You Can Keep in Chapter 7

Texas offers generous bankruptcy exemptions compared to most states. You can choose between Texas state exemptions or federal bankruptcy exemptions. State exemptions often provide better protection for homeowners and car owners. Federal exemptions offer a wildcard option for other assets.

Why Bankruptcy Exemptions Matter in Chapter 7

Exemptions protect your property from being sold during bankruptcy. When you file Chapter 7, you list everything you own. All of these items become part of your bankruptcy estate.

The bankruptcy trustee can sell non-exempt property to pay creditors. Most Chapter 7 cases are no-asset cases. You keep everything because exemptions protect all your belongings.

Some exemptions are unlimited and cover full item values. Others have specific dollar limits.

Choosing Between State and Federal Exemptions

The Bankruptcy Code includes federal exemptions for the entire country. States can create their own exemption systems. Texas allows you to pick which set works better for you.

You must be a Texas resident for two years to use state exemptions. You cannot mix federal and state exemptions. Choose one complete set for your entire case.

Texas exemptions are more generous for homes and vehicles. Federal exemptions work better if you have assets without state protection. The federal wildcard exemption protects up to $17,475 in any property.

Choosing the right exemptions can make or break your case. Speak with a bankruptcy attorney for free to determine which set protects your assets better.

Texas State Exemptions: What You Can Protect

Texas provides some of the most protective exemptions in America. Here’s what you can keep.

Texas Homestead Exemption

The homestead exemption protects unlimited equity in your primary residence. Acreage restrictions apply based on your location.

Urban properties receive protection for up to 10 acres. Rural homeowners can protect up to 100 acres.

You can keep sale proceeds for six months after selling. Texas doesn’t limit the dollar value of your home equity.

Personal Property Protection

Personal property includes vehicles, furniture, clothing, and household items. Single filers can protect up to $50,000 in total personal property. Married couples filing jointly double that amount to $100,000.

Protected items that count toward your $50,000 cap include:

• Athletic and sporting equipment, including bicycles
• Two firearms
• Home furnishings and family heirlooms
• Jewelry worth up to $12,500 (single) or $25,000 (married)
• Food and clothing
• Domestic animals, pets, and livestock with specific quantity limits

Protected items that don’t count toward your cap:

• Religious texts and sacred writings
• Health aids like wheelchairs and hearing aids
• Alimony and child support payments
• Burial plots

Motor Vehicle Exemption

Texas protects one vehicle per licensed household member. The exemption covers the complete vehicle value.

Household members without licenses can still exempt one vehicle. Someone else with a license must operate it on their behalf. Vehicle values count toward your $50,000 personal property limit.

No Wildcard Exemption in Texas

Texas law doesn’t include a wildcard exemption. You cannot protect random assets of your choosing under state law.

Federal exemptions offer a wildcard of $1,675 plus unused homestead amounts. The total wildcard can reach $17,475. Filers with unusual assets might benefit from choosing federal exemptions.

Retirement Accounts and Pensions

Texas protects numerous retirement and pension accounts:

• IRAs, Roth IRAs, and Keogh accounts
• ERISA-qualified church and government benefits
• Public employee pension and retirement accounts
• Police, firefighter, and emergency worker survivor benefits
• Teacher retirement benefits
• Judicial pension benefits
• Other tax-deferred retirement accounts

Public assistance benefits are also exempt. These include unemployment compensation and workers’ compensation. Crime victims’ compensation receives protection as well.

Insurance Benefits

Many insurance policies receive exemption protection in Texas:

• Life, accident, health, and annuity benefits
• Fraternal benefit society payments
• Texas employee group insurance benefits
• Public school employee insurance benefits
• State college and university employee benefits

Report the cash value of these policies in your bankruptcy paperwork.

Lawsuit Settlements

State law rarely protects lawsuit settlement proceeds. Federal exemptions offer limited protection for personal injury awards. The federal wildcard can protect portions of settlement funds.

Pending lawsuits are assets in bankruptcy. You must disclose all legal claims in your paperwork.

Comparing Texas and Federal Exemptions

Compare how each system protects your most valuable property. Here’s a side-by-side comparison of common exemptions.

Getting Help With Your Texas Chapter 7 Case

Choosing the right exemptions protects your property during bankruptcy. Texas residents have unique advantages with their generous state exemptions.

A bankruptcy attorney can review your specific situation. They’ll help you choose between state and federal exemptions. Professional guidance ensures you protect maximum assets while eliminating debt.

Chapter 7 bankruptcy can discharge most unsecured debts in 3-4 months. You can keep your home, car, and personal property with proper planning.