Bankruptcy Exemptions in Texas
What property you can keep in bankruptcy in Texas: homestead, vehicle, wildcard and retirement exemptions, and whether you can choose the federal exemptions.
Short answer: Texas law sets no dollar limit on the homestead exemption; it is limited by area instead. An urban homestead (or an urban home also used for a business) may be up to 10 acres, in one or more contiguous lots. Tex. Prop. Code §§ 41.001, 41.002
| Homestead exemption | Texas law sets no dollar limit on the homestead exemption; it is limited by area instead. An urban homestead (or an urban home also used for a business) may be up to 10 acres, in one or more contiguous lots. A rural homestead may be up to 200 acres for a family, or 100 acres for a single adult, in one or more parcels. The homestead is exempt from seizure for creditors' claims except for liens properly fixed on it (such as purchase money, property taxes, written contracts for improvements, certain refinances, home equity loans, and reverse mortgages that meet constitutional requirements). Proceeds from selling a homestead are protected for six months after the sale. Section 41.002(c) defines when a homestead is urban. Section 41.008 says that where federal law caps the homestead amount or acreage, the Texas subchapter prevails to the extent federal law allows; the federal Bankruptcy Code can limit homestead exemptions in some situations (for example, recently acquired homesteads). |
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| Car exemption | A two-, three-, or four-wheeled motor vehicle is exempt for each member of a family or single adult who holds a driver's license, or who does not hold one but relies on someone else to drive for them. Vehicles count toward the overall personal property cap: an aggregate fair market value of not more than $100,000 for a family or $50,000 for a single adult, not counting liens. Boats and motor vehicles used in a trade or profession, and farming or ranching vehicles, are separately listed within the same cap. A security interest or lien on the vehicle is not avoided because the property is exempt (§ 42.002(b)). |
| Wildcard exemption | Texas has no wildcard exemption. The personal property exemption covers only the categories listed in the statute (such as home furnishings, clothing, vehicles, tools of a trade, two firearms, certain animals, and pets), up to the $100,000 family or $50,000 single-adult aggregate cap; there is no general allowance for any property of the debtor's choice. |
| Retirement accounts | In addition to the personal property cap, a person's interest in and right to receive payments from a qualified savings plan, vested or not, is exempt. This includes employer, government, and church retirement plans, plans for the self-employed, SEP plans, traditional and Roth IRAs (including inherited IRAs), health savings accounts, Coverdell and 529 education accounts, Texas prepaid tuition and savings plans, ABLE accounts, and annuities bought with plan distributions, to the extent the plan is tax-exempt or tax-deferred. Distributions stay exempt for 60 days (and after that if rolled over). Not exempt: excess contributions under IRC § 4973 and their earnings, and unfunded, unsecured employer promises of deferred compensation. These exemptions do not apply to a child support lien (§ 42.005). Source: Tex. Prop. Code § 42.0021 |
| Wages | Current wages for personal services are exempt from seizure and are not counted toward the personal property cap, except for enforcement of court-ordered child support. Unpaid commissions for personal services are exempt up to 25 percent of the aggregate cap ($100,000 for a family, $50,000 for a single adult) and do count toward that cap. |
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FAQ
How much home equity is protected in bankruptcy in Texas?
Texas law sets no dollar limit on the homestead exemption; it is limited by area instead. An urban homestead (or an urban home also used for a business) may be up to 10 acres, in one or more contiguous lots. A rural homestead may be up to 200 acres for a family, or 100 acres for a single adult, in one or more parcels. The homestead is exempt from seizure for creditors' claims except for liens properly fixed on it (such as purchase money, property taxes, written contracts for improvements, certain refinances, home equity loans, and reverse mortgages that meet constitutional requirements). Proceeds from selling a homestead are protected for six months after the sale.
Can I keep my car in bankruptcy in Texas?
A two-, three-, or four-wheeled motor vehicle is exempt for each member of a family or single adult who holds a driver's license, or who does not hold one but relies on someone else to drive for them. Vehicles count toward the overall personal property cap: an aggregate fair market value of not more than $100,000 for a family or $50,000 for a single adult, not counting liens. Boats and motor vehicles used in a trade or profession, and farming or ranching vehicles, are separately listed within the same cap.
Does Texas have a wildcard exemption?
Texas has no wildcard exemption. The personal property exemption covers only the categories listed in the statute (such as home furnishings, clothing, vehicles, tools of a trade, two firearms, certain animals, and pets), up to the $100,000 family or $50,000 single-adult aggregate cap; there is no general allowance for any property of the debtor's choice.
Are retirement accounts protected in bankruptcy in Texas?
In addition to the personal property cap, a person's interest in and right to receive payments from a qualified savings plan, vested or not, is exempt. This includes employer, government, and church retirement plans, plans for the self-employed, SEP plans, traditional and Roth IRAs (including inherited IRAs), health savings accounts, Coverdell and 529 education accounts, Texas prepaid tuition and savings plans, ABLE accounts, and annuities bought with plan distributions, to the extent the plan is tax-exempt or tax-deferred. Distributions stay exempt for 60 days (and after that if rolled over). Not exempt: excess contributions under IRC § 4973 and their earnings, and unfunded, unsecured employer promises of deferred compensation.
Are wages protected in bankruptcy in Texas?
Current wages for personal services are exempt from seizure and are not counted toward the personal property cap, except for enforcement of court-ordered child support. Unpaid commissions for personal services are exempt up to 25 percent of the aggregate cap ($100,000 for a family, $50,000 for a single adult) and do count toward that cap.
General legal information, not legal advice. Laws change and local rules can differ; check the linked official source or talk to a lawyer about your situation.