Texas Bankruptcy Exemptions

Like all states, Texas has a set of exemptions you can use to protect some property when filing for bankruptcy, such as a home, car, and retirement account. In this article, you'll learn:

• how long you must live in Texas before using its exemptions
• whether Texas exemptions will protect all of your property, and
• what will happen to any property you can't exempt.

If you have more questions, read How Bankruptcy Works in Texas. Not only will you find answers, but it includes helpful checklists and a link to an interactive bankruptcy quiz. Or, try the start-to-finish "Filing for Bankruptcy" guide.

How Texas Bankruptcy Exemptions Work

You can protect property covered by an exemption regardless of whether you file for Chapter 7 or 13. But each chapter treats nonexempt property—things not covered by an exemption—differently.

• In Chapter 7 bankruptcy, the bankruptcy trustee sells nonexempt property and distributes the proceeds to creditors.
• In Chapter 13 bankruptcy, you keep everything you own. However, you must pay the value of the nonexempt property equity in your repayment plan, or your disposable income, whichever is more.

The different approaches ensure that creditors receive the same amount regardless of the chapter filed.

Choosing the Best Exemption System

Texas is one of the few states that let you choose between state and federal bankruptcy exemptions. You won't be able to select exemptions from each list—you must pick the system that will work best overall. If you choose the Texas exemptions, you can also use the federal nonbankruptcy exemptions.

Common Texas Bankruptcy Exemptions

Here are some commonly-used Texas exemptions. Keep in mind that married couples filing together in a joint bankruptcy can double most exemption amounts if both spouses have an ownership interest in the exempt property.

Texas Homestead Exemption

The Texas homestead exemption is as generous as homestead exemptions come. You can protect an unlimited amount of equity in your principal residence. It applies to properties on 10 acres or less in a city, town, or village or 100 acres or less in the country (families can double this to 200 acres). (Tex. Prop. Code §§ 41.001 - 41.003; Tex. Const., Art. 16, §§ 50, 51.)

Learn more about qualifying for the Texas homestead exemption and protecting your home in bankruptcy.

Texas Motor Vehicle Exemption

The Texas motor vehicle exemption is also generous—the law allows you to exempt the entire value of one motor vehicle per licensed household member. If you have a household member who doesn't have a license, you can still exempt that vehicle if the unlicensed person relies on someone else to operate the vehicle. However, you must include the motor vehicles in the $50,000/$100,000 personal property exemption cap--more below. (Tex. Prop. Code § 41.002(a)(9).)

Find out how the motor vehicle exemption works in a Chapter 7 case and protecting cars in bankruptcy.

Texas Personal Property Exemptions

The personal property you exempt (things other than real estate) cannot exceed a total of $50,000 if you are a single adult or $100,000 if you have a family. For example, if all your personal property is worth $125,000, you can exempt only $100,000 of it if you are the head of a family. The remaining $25,000 will be nonexempt. By contrast, a single person would be limited to a total of $50,000 of personal property.

You'll include these items in the $50,000/100,000 cap:

• Home furnishings, including family heirlooms. (Tex. Prop. Code § 42.002 (a)(1).)
• Clothing and food. (Tex. Prop. Code § 42.002 (a)(2),(5).)
• Farming and ranching vehicles and implements. (Tex. Prop. Code § 42.002 (a)(3).)
• Tools of the trade, books, equipment, commercial boat, or vehicles. (Tex. Prop. Code § 42.002 (a)(4).)
• Jewelry is limited to $12,500 for a single filer and $25,000 for a family. (Tex. Prop. Code § 42.002 (a)(6).)
• Two firearms. (Tex. Prop. Code § 42.002 (a)(7).)
• Athletic and sporting equipment, including bicycles. (Tex. Prop. Code § 42.002 (a)(8).)
• Animals, including pets and domestic animals plus their food; two horses, mules, or donkeys, plus tack; 12 head of cattle; 60 head of other livestock; and 120 fowl. (Tex. Prop. Code § 42.002 (a)(10),(11).)

These items are also exempt, but you don't need to count them as part of the $50,000/100,000 cap:

• Current wages except for court-ordered support. (Tex. Prop. Code § 42.001 (b)(1).)
• Health aids such as wheelchairs, canes, and hearing aids. (Tex. Prop. Code § 42.001 (b)(2).)
• Alimony, support, and maintenance. (Tex. Prop. Code § 42.001 (b)(3).)
• Bibles or other books containing sacred religious writings. (Tex. Prop. Code § 42.001 (b)(4).)
• Burial plots (Tex. Prop. Code § 41.001 (a).)

Pensions and Retirement Accounts

Most tax-exempt pensions and retirement accounts are exempt, even if you choose the Texas exemptions instead of the federal exemptions. These pensions and accounts include particular pensions or retirement funds that receive special tax exemptions under the U.S. Tax Code. You can check with your fund to find out if it qualifies for tax-exempt status or read more about your retirement account in bankruptcy.

Additionally, Texas provides that the following pensions and retirement accounts are exempt under Texas law:

• Qualified retirement plans. (Tex. Prop. Code § 42.0021.)
• State employees; teachers; judges; county and district employees; municipal employees. (Tex. Govt. Code §§ 811.004 - 811.006.)
• Firefighters; policemen. (Tex. Civ. Stat. Ann. Art. 6243a-1, g, j.)

Insurance Exemptions

• Fraternal benefit society benefits (such as those provided by the Freemasons, the Knights of Columbus, and the Elks). (Tex. Ins. Code § 885.316.)
• Life, health, accident, or annuity benefits, including any money, policy proceeds, or cash value due to or paid to the beneficiary or insured. Tex. Ins. Code § 1108.051.
• Texas state employee group life insurance. (Tex. Ins. Code § 1551.011.)

Other Exemptions

• College savings plans. (Tex. Prop. Code § 42.0022.)

• Crime victim's award. (Tex. Crim. Pro. Code 56.49.)
• Public officers killed in duty survivors benefits. (Tex. Govt. Code § 615.005.)
• AFDC, welfare, foster care benefits. (Tex. Hum. Res Code § 31.040.)
• Medical assistance. (Tex. Hum. Res Code § 32.036.)
• Interest in specific partnership property. (Tex Rev. Civ. Stat. Art. 6132a § 7.03(d).)
• Unemployment benefits and workers' compensation. (Tex. Labor Code §§ 207.075, 408.201.)

When You Can Use Texas Bankruptcy Exemptions

You can file for bankruptcy in Texas after living there for more than 180 days. However, you must live in Texas much longer before using Texas exemptions—at least 730 days before filing, to be exact. Otherwise, you'd use the previous state's exemptions.

But suppose you weren't living in any particular state during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period that immediately preceded your filing. (11 U.S.C. § 522(b)(3)(A).)

Also, to claim the total value of the Texas homestead exemption, you must have purchased and owned the property for at least 1,215 days before the bankruptcy filing. If you can't meet this requirement, your homestead exemption is limited by federal law to $189,050 (valid for bankruptcy cases filed between April 1, 2022, and April 1, 2025).

Learn more about filing for bankruptcy after moving to a new state and who can and can't file for bankruptcy.

Avoiding Exemption Issues in Texas

If you don't exempt your property carefully, you could lose it. Answers to these questions might help you steer clear of common issues.

Do I automatically get to keep exempt property? Generally, no. Here's the procedure you'll need to follow: You'll select the exemption set that best protects your property, list the exempt assets and applicable exemption laws on Schedule C: The Property You Claim as Exempt, and file it with your other required paperwork.

Will someone check my exemptions? The bankruptcy trustee—the court-appointed official tasked with managing your case—will review Schedule C to ensure that you have the right to protect the claimed property. A trustee who disagrees with your exemptions will file an objection with the court. The judge will decide whether you can keep the property.

Example. Jeff owns a rare, classic car worth $15,000, but the state vehicle exemption won't adequately protect it. Believing that the car qualifies as art—at least in his mind—Jeff exempts it using his state's unlimited artwork exemption. The trustee reviews Schedule C, disagrees with Jeff's characterization and files an objection with the court. After consideration, the judge will likely side with the trustee, determining that the vehicle doesn't qualify as a piece of art.

What if I make a mistake? Most trustees won't file an objection unless it's clear that the debtor is trying to pull something over on the court. At least not without trying to resolve the issue first. If there's a minor exemption problem, the trustee will likely call you to work out the matter informally.

It's worth noting that it's not a good idea to finesse exemptions. Not only do you have an obligation to supply correct information on your bankruptcy forms, but purposefully making inaccurate statements could be considered fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.

Confirming Texas Bankruptcy Exemptions

This isn't an exhaustive list of Texas exemptions, and the amounts change periodically. Check statutes on the Texas Constitution and Statutes website or consult with a local bankruptcy lawyer. You can also learn about finding state statutes in Laws and Legal Research.

Need More Bankruptcy Help?

Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles that explain what bankruptcy is and how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

Updated March 15, 2022