Exemptions determine what property you get to keep when you file bankruptcy. Understanding them is critical - they can mean the difference between keeping and losing your home, car, and savings.
Texas's homestead exemption protects Unlimited (up to 10 acres urban / 100 acres rural) of equity in your primary residence. Equity is the difference between your home's value and what you owe on the mortgage.
Bankruptcy exemptions are laws that protect certain property from being taken to pay your creditors. In Chapter 7, non-exempt property can be sold by the trustee. In Chapter 13, the value of non-exempt property affects how much you must pay through your plan.
Texas requires you to use state exemptions - you cannot choose the federal exemption system.
Protects Unlimited (up to 10 acres urban / 100 acres rural) of equity in your primary residence. Equity is your home's current market value minus what you owe on the mortgage.
Tex. Prop. Code 41.001
Protects Fully exempt if needed for work (per person) of equity in your motor vehicle. If you owe more than the car is worth (you are "underwater"), there is no equity to protect and the exemption is not needed.
Tex. Prop. Code 42.002
| Property | Texas Exemption | Statute |
|---|---|---|
| Homestead | Unlimited (10 acres urban / 100 acres rural) | Tex. Prop. Code 41.001 |
| Vehicle | Fully exempt (1 per licensed household member) | Tex. Prop. Code 42.002 |
| Personal property (aggregate) | $60,000 married / $30,000 single | Tex. Prop. Code 42.001 |
| Clothing | Included in personal property | Tex. Prop. Code 42.002 |
| Tools of trade | Unlimited | Tex. Prop. Code 42.002 |
| Retirement accounts (IRA, 401k, pension) | Unlimited | Tex. Prop. Code 42.0021 |
| Social Security benefits | Unlimited | 42 U.S.C. 407 |
| Wages (current) | Unlimited (non-garnishable in Texas) | Tex. Prop. Code 42.001 |
| Life insurance (cash value) | Unlimited | Tex. Ins. Code 1108.051 |
| Health aids | Unlimited | Tex. Prop. Code 42.002 |
Texas's homestead exemption protects Unlimited (up to 10 acres urban / 100 acres rural) of equity in your primary residence. Equity is the difference between your home's value and what you owe on the mortgage.
Texas's motor vehicle exemption is $0 - fully exempt if needed for work. If your car equity is within the limit, you can keep it in Chapter 7. In Chapter 13, you can keep your car and catch up on payments through your plan.
Yes. Retirement accounts including IRAs, 401(k)s, and pensions are fully exempt in Texas. Social Security benefits are also fully exempt under federal law.
Texas protects $60,000 (married) / $30,000 (single) in personal property. Tools of trade up to Unlimited. Health aids and Social Security benefits are fully exempt. See the complete table above.
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