·  Legal News, Analysis, & Commentary

News & Politics

Your Guide to Houston Bankruptcy Exemptions

— June 9, 2023

In fact, in many bankruptcy situations, debtors are able to retain most, if not all of their property.

Houston, TX – Filing for bankruptcy in Texas (or any other state) can be a real nightmare, not to mention headache-inducing. While it might strike you as complex, understanding all the do’s and don’ts, and familiarizing yourself with Texas bankruptcy law is actually not a bad idea.

One of the most important things you need to discuss with skilled lawyers is the heavily-debated matter of bankruptcy exemptions. One of our biggest fears when it comes to filing for bankruptcy is that we will lose everything. But that’s not always the case.

In fact, in many bankruptcy situations, debtors are able to retain most, if not all of their property.

How does bankruptcy work in Texas?

How much of your property you keep depends on what type of bankruptcy you file for. 

Experienced Houston bankruptcy lawyers. will tell you that, as an individual, you can either file for Chapter 7 or Chapter 13 bankruptcy.

With Chapter 7 bankruptcy, basically, you’re enabling appointed trustees to sell all non-exempt property in a bid to repay creditors as swiftly as possible. Chapter 7 bankruptcy cases typically take no more than 3-4 months, though they may mean losing quite a lot of property, including, even, your home, or vehicle, if you are behind on payments.

With Chapter 13 bankruptcies, on the other hand, the court allows you to keep all of your property. You are not forced to sell anything, provided you respect and adhere to a monthly payment plan. Chapter 13 bankruptcy cases can stretch out over several years.

Irrespective of the type of bankruptcy you file for, creditors will receive the same amount. What differs is the time frame, the personal cost, and the property you may be forced to renounce.

Texas bankruptcy exemptions

Texas exemptions are actually quite permissive, being designed to ensure individuals get to keep quite a lot of their personal property when filing for bankruptcy. Texas bankruptcy lawyers point out that if you are filing for bankruptcy with a spouse, you may be able to double your exemptions since you are both entitled to personal equity.

  • Motor vehicles – Texas exemption law is generous when it comes to personal motor vehicles, allowing you to fully exempt one motor vehicle per licensed household member. You may also exempt vehicles for non-licensed family members, provided you can prove they are dependent on someone else to operate the vehicle, and that you deduct it from your personal $50,000 – $100,000 property exemption cap;
  • Homestead – homestead exemptions are also quite generous, allowing unlimited equity for a property of up to 10 acres (in the city) or up to 100 acres (in the country);
  • Retirement/pension account – most of these are fully exempt;
  • Insurance – several types of insurance (home, personal, accident, annuity, group insurance, etc.) are also exempt;
  • Welfare benefits;
  • College savings plans;
  • Unemployment benefits;
  • Medical assistance.

What is the personal property exemption cap?

Stealing Jewelry, a Lemur, a Tortoise Will Get Anyone Caught
Photo by Jacek Dylag on Unsplash

Yet another way in which Houston bankruptcy lawyers can help you keep your property is through the personal property exemption cap. For a single adult, that cap is at $50,000, while families benefit from a generous cap of $100,000.

This may include several types of property, excluding real estate:

  • Jewelry (up to $12,500 worth or $25,000 worth for a couple)
  • Two firearms
  • Clothing
  • Food
  • Home furnishings, family, heirlooms, etc
  • Trade tools, books, etc
  • Sports equipment
  • Animals
  • Health aids
  • Current wages (unless otherwise specified by court)
  • Burial plots.

Join the conversation!