Many people have the notion that most of their property will be seized in Chapter 7 bankruptcy proceedings. While this may be true for some, it is certainly not the case for most. Property exemptions allow a debtor to protect certain property from being seized by the trustee. Many assets and personal property are protected by exemption, though the extent of the protection varies depending on which exemption a debtor chooses.

Debtors have the option to decide whether they want to protect their property through federal or state law. Most debtors are better off using exemptions provided by the state, though some fair better under federal protection. Speak with a bankruptcy attorney to determine which option is best for your situation.   

Bankruptcy Attorney in Dallas County

Retaining legal counsel is the first step in a successful bankruptcy case. Linda Littlefield will help you make an informed decision on which exemption is best for protecting your property. Not only this, but she will guide you through the bankruptcy process and ensure you receive the financial peace you deserve.

Call (972) 812-0900 to take advantage of our free consultation. Littlefield Law Firm assist clients in areas such as Dallas County, Collin County, Rockwall County and Kaufman County.

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How Do Property Exemptions Work?

You do not have to lose all of your property during bankruptcy proceedings. In fact, many debtors can protect most, if not all of their property through property exemption. Exempt property is property that is protected from creditors when you file for bankruptcy. Meaning a trustee cannot seize the property and sell it to pay back creditors.

Each state and the federal government have its own set of bankruptcy exemptions a debtor can use to protect their assets. Thankfully, Texas is generous in their exemptions and allows you to decide whether you’d like to use federal or state guidelines.

While you can elect which exemption is best for your situation, you are not allowed to mix and match; you can only choose one scheme. In most cases, a debtor is better off using Texas bankruptcy exemptions since the state is more giving than the Federal Government. However, if you have valuable assets that are not exempt under Texas law, you may want to consider the federal wildcard exemption, which will be discussed later.

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Texas Property Exemptions

Like mentioned earlier, Texas is more generous with its exemptions than the Federal Government. Each eligible property is protected up to a certain amount. If you are married and filing for joint bankruptcy, the protected amount will be doubled. 

Listed below is property eligible for exemption under Texas law:


Texas allows debtors to exempt an unlimited amount of their home under the homestead exemption. However, the state limits how many acres are protected based on where the property is located. Homes located in a city, town or village cannot exceed ten acres while homes in rural areas cannot be more than 100 acres unless the rural home is occupied by a family. If this is the case, the property cannot exceed 200 acres.

The Texas homestead exemption covers all real property serving your primary residence. All improvements such as pools, barns and other affixed items are also included in the homestead exemption. Burial plots are also included in this unlimited exemption.

Motor Vehicles

The motor vehicle exemption in Texas is also generous. According to the Texas Property Code, a debtor can exempt the full value of one motor vehicle per household member with a driver’s license. You can still exempt a vehicle if you have an unlicensed driver in your household who relies on someone for transportation.

Personal Property

In addition to vehicles and homestead, the Texas Property Code also allows for a certain amount of personal property to be exempt in bankruptcy proceedings. Debtors who submit a joint petition can exempt up to $100,000 in personal property, while single adults can exempt $50,000. 

Listed below is property eligible for exemption:

  • Up to two guns
  • Clothing and food
  • Sporting and athletic equipment
  • Home furnishing and heirlooms
  • Domestic animals and their food
  • Up to 2 horses, donkeys, mules and tack for each
  • 12 heads of cattle
  • 60 heads of other livestock
  • 120 poultry
  • Farming and ranching vehicles
  • Tools, boats and motor vehicles used for work

This exemption also protects books containing religious text, but their amount does not contribute to the $100k/$10k limit. Jewelry is also exempt, but only by up to 25% of the total exemption. This includes $25,000 worth of jewelry for joint filers and $12,500 for single adults.

Retirement Accounts, Pensions and Insurance  

Texas and federal law allow debtors to exempt most tax-exempt retirement accounts and pensions. A bankruptcy attorney can review your funds to determine if they qualify for exemption. Texas bankruptcy law exempts certain retirement accounts and pensions that federal law does not. Qualifying accounts include:

  • ERISA qualified government or church benefits, including Roth IRAs, IRAs and Keoghs
  • Tax-deferred retirement benefits
  • Pensions for the following occupations:
    • Teachers
    • Judges
    • Police officers
    • District and county employees
    • Firefighters
    • Elected officials, state employees and municipal employees
    • Survivors of firefighters, police officers and EMTs

Texas also allows for the following insurance plans to be exempt from bankruptcy proceedings: 

  • Benefits for employees of Texas state colleges
  • Fraternal benefits from societies such as Knights of Columbus, Elks, Freemasons, etc.
  • Uniform group insurance for Texas employees
  • Life, health, accident or annuity benefits to be paid to beneficiaries or those insured 

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Federal Property Exemptions

The federal government exempts property similar to Texas’ exemptions, but the protected amount is much smaller, especially for homes and vehicles. As with Texas law, the amount for a federal exemption will be doubled if you are filing a joint petition with a spouse.

Listed below is property eligible for exemption under federal law:


Federal bankruptcy law is not as generous as Texas in protecting your home. Federal exemptions will only protect up to $25,150 of equity in your primary residence. However, this exemption does not protect the equity in rental or investment properties. 

Even though Texas offers an unlimited homestead exemption, federal law will limit the exemption amount to $170,350 if you have not lived in the lone star state for at least 40 months before filing for bankruptcy. There is a way around this rule. If you sold your Texas home and used the proceeds to purchase a new home in in the same state, then you can combine the length of the ownership of both houses to satisfy the rule. 

Personal Property

Listed below is the type of property and the value protected by federal exemption. Remember, the posted amount will be doubled if you and your spouse filed a joint petition.

  • $4,000 equity of a motor vehicle (one car per spouse)
  • $625 per individual item or $13,400 in aggregate value for the following:
    • Household furnishings
    • Household goods
    • Clothes
    • Appliances
    • Books
    • Animals
    • Crops
    • Musical instruments
  • $1,700 worth of jewelry
  • $2,525 for tools and books used for work
  • 13,400 for an unmatured life insurance policy

Benefits and Support

Federal law grants a debtor the opportunity to protect the following benefits and support:

  • Life insurance payments
  • Social security benefits
  • Unemployment
  • Local public assistance
  • Veterans benefits
  • Alimony or child support
  • Payments from a stock bonus, pension, profit sharing, annuity or similar plan
  • Up to $1,362,800 for retirement funds from an account exempt from taxation by the IRS 

Personal Injury Recovery and Other Compensation

One asset the federal government protects that Texas does not is compensation from a personal injury case. As the bankruptcy code currently stands, you can exempt up to $25,150 from a personal injury case. In addition to the exempt amount, you can also protect the following: 

  • Any award from the loss of future earnings
  • Recovery from the wrongful death of a person you relied on for support
  • Compensation for being a victim of a crime

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What is a Wildcard Exemption?

A wildcard exemption can protect property that would have otherwise not been protected. Many states offer this exemption, but Texas does not. But not to worry. If there is one piece of property you really need to protect, you can use a federal wildcard exemption.

You can only use the federal wildcard exemption if you opt for federal exemptions. Texas law does not allow you to mix and match exemptions, so it will have to be one or the other. This exemption allows you to protect property worth $1,325 plus $12,575 of any unused amount of the homestead exemption. 

Most people use the wildcard exemption to protect non-exempt assets, but it’s also used to protect the remaining cost of property not covered by the federal exemption. For instance, the federal vehicle exemption is $4,000, but you have $5,000 in equity. By making use of the wildcard, you can use the granted amount to cover the remaining cost of your vehicle and prevent it from being seized.

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Additional Resources 

Exempt Property and Liens | Texas Property Code – Read the section of the Property Code governing exempt property by following the link. You can find a list of property that is exempt from seizure and not included in the aggregate value of the exemption and learn about exemptions for college savings plans. 

Increase of Federal Bankruptcy Exemptions | National Consumer Law Center – Every three years Congress adjust the exemption amounts for inflation. The figures on the page reflect the most recent increase that was implemented on April 1, 2019. Follow the link to read a short article about the matter and gain access to a comprehensive list of increased exemptions.

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Bankruptcy Lawyer in Dallas

Scouring the internet will not turn you into a bankruptcy expert overnight. You will need the assistance of a proven attorney to aid you through the process. Linda Littlefield is a tenacious bankruptcy lawyer who will do everything in her power to ensure your property is protected.

Call (972) 812-0900 to schedule a free case evaluation. Littlefield Law Firm represents clients in areas such as Dallas, Plano, Fate and Oak Grove.

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