If you file for Chapter 7 bankruptcy in Texas, the Texas motor vehicle exemption allows you to protect equity in your car, motorcycle, truck, van, or other vehicle. Although Texas doesn't limit the amount of automobile equity you can exempt, there is a limit to the overall amount of property equity you can exempt in bankruptcy. Here you’ll find information about the Texas car exemption: how much it is, what types of vehicles it covers, how it works for married couples, how to find the applicable statute, and more.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
Texas’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than Texas’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
In Texas, you are allowed to exempt a two, three, or four-wheeled motor vehicle for each single adult or each family member who has a driver’s license or who does not have a driver’s license but relies on someone else to drive his or her car.
Even though there is no dollar limit specified in the motor vehicle exemption, Texas has a limit on the aggregate amount of personal property you can exempt. The aggregate limit on personal property, which includes your motor vehicle, is $50,000 for a single person or $100,000 for a family.
Texas allows you to choose between the state exemptions or the federal bankruptcy exemptions. The federal motor vehicle exemption amount changes every three years. To find the current amount, see our article The Federal Bankruptcy Exemptions.
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. In Texas, this is not as relevant because there is no dollar amount specified for the motor vehicle exemption. Also, the aggregate personal property exemption limits are already based on whether you are a single person or a family so they cannot be increased further.
There may be other advantages to filing bankruptcy jointly with your spouse. Learn more about joint bankruptcy in our section on Bankruptcy Options for Married Couples.
You can find Texas’s motor vehicle exemption at Texas Property Code Annotated § 42.002 (a)(9).
The exemption laws in Texas change periodically. Check the latest exemption amounts before filing bankruptcy to make sure you can protect all of your property.