Texas is known for having one of the most generous homestead exemptions in the United States—an important factor if you’re considering bankruptcy. Bankruptcy is a federal legal process that can help individuals or businesses struggling with debt achieve a fresh start. When you file in Texas, you must follow both federal laws (Title 11 of the U.S. Code) and state-specific rules that determine exemptions, property protections, and filing procedures.
Filing for bankruptcy triggers an automatic stay, which halts most collection actions, including foreclosure,wage garnishment, and creditor harassment. This legal shield allows Texans time to reorganize their finances (under Chapter 13 of the Bankruptcy Code) or discharge qualifying debts (under Chapter 7). Which chapter you file depends on income, asset ownership, and your long-term financial goals.
Chapter 7 bankruptcy, sometimes called “liquidation bankruptcy,” eliminates most unsecured debts, such as credit card bills and medical expenses. Texans who file Chapter 7 can usually keep their primary home if it falls under Texas’ homestead exemption guidelines, which often protect an unlimited amount of home equity (subject to acreage and residency requirements).
Chapter 13 bankruptcy is a reorganization option where filers repay debts over three to five years. This chapter is popular among those aiming to keep valuable assets, catch up on missed mortgage payments to prevent foreclosure, or manage overdue car loans in a structured way. Successful completion of a Chapter 13 plan results in a discharge of any remaining qualifying debts.
Whether filing Chapter 7 or 13, certain debts are not typically dischargeable, including student loans (unless you can prove undue hardship), certain taxes, and domestic support obligations (like alimony and child support). At the end of your bankruptcy case, the court issues a discharge order that permanently prohibits creditors from collecting on debts included in that discharge.
In Texas, you cannot choose the federal bankruptcy exemptions exemptions; you must follow the Texas exemption laws. Perhaps the most notable is the state’s homestead exemption, which can safeguard a primary residence’s equity—often without an upper monetary cap if it’s on limited acreage (10 acres in an urban area, 100 acres in rural settings for a single filer, or 200 acres for families[1]). Other protected property can include personal vehicles, certain personal items, and retirement accounts.
These exemptions can be critical in both Chapter 7 and Chapter 13 cases. In a Chapter 7, exempt assets remain yours rather than being sold by the trustee. In Chapter 13, the value of any non-exempt property can affect how much you must repay unsecured creditors through the plan.
Disclaimer: This content is for informational purposes only and does not constitute legal advice. For personalized guidance tailored to your circumstances, consult a qualified bankruptcy attorney.
We’ve created resources for individuals in major cities across Texas. Click below for more tailored information: