Chapter 7 Bankruptcy Exemptions in Texas: Home, Car, and Wages

Chapter 7 bankruptcy exemptions in Texas are unusually generous: there is no dollar cap on home equity, one vehicle per licensed driver in the household is protected, retirement accounts and current wages are shielded almost entirely, and up to $50,000 in other personal property ($100,000 for a family) stays with you. For most filers, that combination means little or nothing is actually sold by the trustee.

Exemptions are the rules that decide which of your assets the Chapter 7 trustee can liquidate to pay creditors. Everything that fits inside an exemption stays yours. In Texas, the list is long enough and the caps high enough that the typical consumer filer walks out of a Chapter 7 with their home, their car, their retirement, and their household goods intact.

The Homestead: Unlimited Equity, Limited Acreage

The Texas homestead exemption is the one most people have heard of, and it earns its reputation. There is no dollar cap on the equity you can protect in your primary residence. The Texas Constitution and the Property Code shield the homestead from forced sale for nearly all debts, so a homeowner with $50,000 of equity and one with $5 million of equity receive the same protection.¹

The limits are on land size instead. An urban homestead (property within city limits) can cover up to 10 contiguous acres. A rural homestead allows up to 200 acres for a family or 100 acres for a single adult, and the rural parcels don’t need to be contiguous.²

The 1,215-Day Federal Cap

If you bought your Texas home recently, federal law overrides the unlimited state exemption. Any interest in the property acquired within 1,215 days (roughly three years and four months) before you file is capped at $214,000.³ This “mansion loophole” rule was written to stop people from pouring cash into a Texas house right before bankruptcy. It applies even when you elect Texas exemptions. Equity rolled over from a prior Texas homestead can sometimes be excluded from the cap, but that’s a fact-specific question best worked out with an attorney.

Sale Proceeds and Debts That Still Reach the Home

If you sell the homestead, the cash proceeds stay exempt for six months after the sale, on the assumption that you reinvest them into a new Texas homestead. Proceeds not reinvested within that window lose their protection.⁴

The homestead shield also has carve-outs. Creditors can still force a sale for the purchase-money mortgage, property taxes, properly executed home equity loans, and mechanic’s liens for construction or renovation contracted in writing.¹

Motor Vehicles

Vehicles sit outside the aggregate personal property cap. Each family member or single adult with a driver’s license can exempt one motor vehicle. The statute also covers household members who don’t drive but depend on someone else to drive them. The vehicle can be two-wheeled, three-wheeled, or four-wheeled.⁵ Texas sets no dollar cap on the vehicle’s value, though a trustee could challenge something extravagant as beyond reasonable necessity.

Personal Property Up to $50,000 or $100,000

Texas protects personal property up to an aggregate fair market value of $50,000 for a single adult or $100,000 for a family. The cap applies to the combined value of everything on the list, not to each item.⁶ The categories that count toward the cap include:

Home furnishings and family heirlooms
Food and household supplies
Clothing
Tools, equipment, and books used in your trade or profession
Farming and ranching vehicles and implements
Two firearms
Athletic and sporting equipment
Jewelry, capped at 25% of your applicable aggregate limit ($12,500 for a single adult, $25,000 for a family)
Livestock (up to 12 cattle, 60 other livestock, 120 fowl, and 2 horses with tack)
Household pets

⁵

Because the cap is aggregate, most households stay well under it once used furniture, clothing, and basic household goods are valued at what they would actually sell for.

Wages, Support, and Social Security

Current wages for personal services are fully exempt and don’t count against the personal property caps. The one exception is court-ordered child support, which can still be enforced against your earnings. Unpaid commissions for personal services are also protected but do count toward the aggregate limit, up to 25% of the applicable cap ($12,500 for a single adult, $25,000 for a family).⁶

Prescribed health aids for you or a dependent and alimony or support payments you receive sit outside the aggregate cap entirely.⁶

Social Security benefits carry their own federal protection under 42 U.S.C. § 407 and are exempt from any bankruptcy proceeding regardless of whether you elect state or federal exemptions. The only exceptions are federal tax levies and court-ordered child support or alimony.⁷

Life Insurance and Annuities

The Texas Insurance Code fully exempts the cash value and proceeds of life insurance policies and annuity contracts from creditor claims in bankruptcy. Benefits belong to the named beneficiary or insured and cannot be seized to pay the policyholder’s debts. The protection applies to policies issued by life, health, or accident insurance companies, and to annuity or benefit plans used by employers or individuals.⁸

Retirement Accounts

Texas exempts virtually all retirement savings, and the state definition of a “qualified savings plan” is deliberately broad:

Employer-sponsored plans such as 401(k)s and pensions (private, government, and church)
Self-employment plans including SEP-IRAs and solo 401(k)s
Traditional IRAs, Roth IRAs, and inherited IRAs
Health savings accounts (HSAs)
Coverdell accounts, 529 plans, and Texas prepaid tuition contracts
ABLE accounts for individuals with disabilities

These accounts are exempt whether or not they’re vested, and the Texas exemption carries no dollar cap.⁹

Federal law adds one ceiling. Traditional and Roth IRA balances (not counting rollovers from employer plans) are capped at $1,711,975 per person. That figure took effect April 1, 2025, and runs through March 31, 2028.³ Employer-sponsored plans like 401(k)s and pensions have no federal dollar cap. Money rolled over from a 401(k) into an IRA also doesn’t count against the IRA cap.

Choosing Texas or Federal Exemptions

Texas is one of a minority of states that lets you pick between its own exemptions and the federal bankruptcy exemptions in 11 U.S.C. § 522(d). You cannot mix. If you choose Texas, every asset is measured against Texas law; if you choose federal, the federal list governs everything.³

For most Texas filers, state exemptions are the clear choice. The unlimited homestead alone dwarfs the federal homestead of $31,575, and the federal caps for a motor vehicle ($5,025), household goods ($16,850 aggregate), jewelry ($2,125), and tools of trade ($3,175) are all lower than their Texas counterparts.³ The federal system’s one real advantage is the wildcard: $1,675 plus up to $15,800 of unused homestead exemption that can be applied to any property. For renters with significant cash or non-traditional assets, the federal wildcard sometimes protects more than Texas’s personal property caps.

Eligibility for Texas exemptions requires that you have lived in Texas for the 730 days (about two years) immediately before filing. If you haven’t, you may be required to use the exemptions from a prior state or fall back on the federal list.³

What Exemptions Don’t Do

Exemptions decide which property you keep. They don’t decide which debts get wiped out. A Chapter 7 discharge leaves several categories of debt in place no matter how well you exempt your assets, including child support and alimony, most recent income taxes, student loans (absent an undue hardship finding), debts from fraud or willful injury, luxury consumer debts over $900 incurred within 90 days of filing, and cash advances over $1,250 taken within 70 days of filing.¹⁰ Credit card balances, medical bills, personal loans, utility arrears, and old lease obligations are generally dischargeable, and that’s where the exemptions-plus-discharge combination does its real work: you keep your property, and the dischargeable debts behind it go away.

1
Justia Law. Texas Constitution Article XVI Section 50
2
State of Texas. Texas Property Code Section 41-002 – Definition of Homestead
3
Office of the Law Revision Counsel. 11 USC 522 – Exemptions
4
State of Texas. Texas Property Code Section 41-001 – Interests in Land Exempt from Seizure
5
State of Texas. Texas Property Code Section 42-002 – Personal Property
6
State of Texas. Texas Property Code PROP 42-001 – Personal Property Exemption
7
Social Security Administration. Levy and Garnishment of Benefits
8
State of Texas. Texas Insurance Code INS 1108-051
9
State of Texas. Texas Property Code Section 42-0021 – Additional Exemption for Certain Savings Plans
10
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge