Practicing Family Law With Heart For More Than 25 Years

Property exemptions in Texas bankruptcy

On Behalf of | Aug 2, 2021 | Bankruptcy, Blog

Bankruptcy in Austin, Texas, gives a debtor a legal way out of debt. They can choose several bankruptcy types, but the most common kinds are Chapter 7 and Chapter 13. Debtors might have to give up assets depending on the type of bankruptcy but exemptions could save some assets.

Assets in bankruptcy

How assets get handled in bankruptcy depends on the type the debtor files. Debtors who file Chapter 7 bankruptcy commonly must sell nonexempt assets, or what the court considers non-essential. Nonexempt assets include second vehicles or home with enough equity, expensive clothing, and valuable artwork. The bankruptcy trustee sells the assets and splits the proceeds among creditors, and the debtor gets some debts discharged.

Debtors pay off debt over time in Chapter 13 bankruptcy, which commonly gives them three or five years. They don’t have to sell assets, but the value can influence the monthly payment. They must make payments according to whichever is greater between disposable income or the current value of the asset.


Exemptions help a debtor keep an asset that would otherwise get sold because of its equity, difference between loans and value. A debtor in Texas may decide to use federal or state exemptions, but they can’t choose both.

The Texas Homestead Exemption gives debtors who have lived in the state 40 months a $146,150 home exemption. This includes homes with pools, less than 100 acres in rural areas, or less than 10 acres in cities, villages, or towns.

Currently, a Texan debtor also gets unlimited motor vehicle exemptions per licensed driver at $3,775 per exemption. The owner doesn’t have to be licensed, but they must list the vehicle under personal property. Single debtors can claim $50,000 in personal property exemptions and married filers can claim $100,000. Personal property includes furniture, clothing, work tools, watercraft, two firearms, books, jewelry, and household goods.

Bankruptcy does not erase all debts, but it has some benefits. The debtor should study the pros and cons of each bankruptcy type before they file.