What Are the Bankruptcy Exemptions in Texas?
Automotive, livestock, unlimited homestead and other debtor options
By S.M. Oliva | Last updated on January 10, 2023Use these links to jump to different sections:
Bankruptcy is designed to let debtors protect their property while affording them relief from creditors. In fact, Texas debtors who file for Chapter 7 or Chapter 13 bankruptcy may be able to keep most of their property away from creditors. The reason for this is Texas state law offers a generous set of bankruptcy exemptions. “Texas is unique,” says Dorothy K. Lawrence, a bankruptcy attorney at Dorothy Butler Law Firm in Dripping Springs. “It’s an extremely debtor-friendly state. You can own a million-dollar home and, as long as it’s your homestead, you can keep it. You can drive $100,000 cars, as long as it’s one car per driver in a household. If you have money in the bank, they’re gonna get that, but your $75,000 Beemer you can keep.”
The Texas Homestead Exemption
Texas provides an unlimited deduction for both a debtor’s homestead (primary residence) and one motor vehicle. In contrast, the federal exemptions only protect a certain amount of equity—no more than $26,374 in 2018—in a home or vehicle. Now, while Texas allows a debtor to exempt an unlimited amount of equity in a homestead, there are acreage limitations. The exempt homestead cannot be used for more than 10 acres in an urban area, or 100 acres in a rural area. If a rural home is used for a family, as opposed to a single person, this acreage limit is doubled to 200 acres. Again, the homestead is only exempt if it is used as the debtor’s actual residence, as opposed to a rental property. However, if the property is sold, the debtor may continue to apply the homestead exemption to the sale proceeds for up to six months.Motor Vehicles & Other Personal Property
One of the first questions Lawrence gets is, “Will I be able to keep my car?” So long as you don’t have multiple vehicles, the answer is yes. And even if you have multiple, you may be able to keep those, too. “You can keep one for every licensed driver in the household,” she says. This includes a 16 year-old who doesn’t yet have a car of their own, or the 85-year-old grandparent in the house who chooses not to drive anymore. And even if a household member is not a licensed driver, an exemption may still apply if that person “relies on another person to operate the vehicle” for them. Keep in mind, when we talk about “equity” in a motor vehicle or home, that reflects the present market value less any money owed on a secured loan. So if you own a car that is worth $20,000, but there’s an outstanding loan of $15,000 on the vehicle, then your equity is only $5,000. In addition to a debtor’s homestead and motor vehicles, Texas offers a wide range of additional “personal property” exemptions. Some of the more commonly used ones include:- livestock, up to 12 head of cattle, 60 head of other types, 120 fowl, and two horses, mules, or donkeys (including their saddles, blankets and bridles)
- home furnishings or family heirlooms
- clothes actually used as “wearing apparel”
- jewelry
- two firearms
- tools used in a trade or profession
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