Bankruptcy in Texas (2026): Exemptions & Means Test

Bankruptcy is a federal process, but Texas is known nationally for two state-law features: an unlimited-value homestead and a choice between exemption systems. Texas has not opted out of the federal bankruptcy exemptions, so a Texas filer may use either the very generous Texas exemptions or the federal list in 11 U.S.C. 522(d), whichever protects more property, but cannot mix the two. The figures below are current as of mid-2026, and you should confirm the latest amounts before relying on them.

This page is general legal information, not legal advice. It is part of our Bankruptcy by State series.

Does Texas use state or federal bankruptcy exemptions?

Texas gives filers a choice. The state has not exercised the opt-out authority in 11 U.S.C. 522(b)(2), so a Texas debtor may elect either the Texas state exemptions or the federal exemptions in 11 U.S.C. 522(d). You cannot mix categories from the two systems; you choose one list and apply it to all of your property.

In practice the decision usually turns on home equity. The Texas homestead is unlimited in value, so a homeowner with significant equity almost always chooses the state exemptions. A renter or a filer with little home equity sometimes finds the federal set more useful, because the federal list includes a flexible wildcard that Texas law does not match in the same form. To claim Texas exemptions, the residency and domicile rules in 11 U.S.C. 522(b)(3) generally require domicile in Texas for the 730 days before filing; otherwise an earlier state's rules, or the federal exemptions, may apply.

The Texas homestead exemption: unlimited value, limited acreage

The Texas homestead is the state's headline feature. Under Tex. Prop. Code 41.001, a homestead is exempt from forced sale for the claims of most creditors, and the statute places no dollar ceiling on the protected equity. That is why Texas, like Florida, is known for letting filers keep a high-value home.

The limit is acreage, not value. Under Tex. Prop. Code 41.002, an urban homestead may consist of not more than 10 acres, in one or more contiguous lots, together with the improvements on it. A rural homestead may consist of not more than 200 acres for a family, or not more than 100 acres for a single adult who is not otherwise entitled to a homestead. A homestead is treated as urban when the property is within a municipality or its extraterritorial jurisdiction or a platted subdivision and is served by police, fire, and at least three listed municipal utilities; otherwise it is rural.

The homestead exemption does not defeat properly fixed encumbrances. Tex. Prop. Code 41.001(b) preserves liens for purchase money, taxes, certain home-improvement work, an owelty of partition, a qualifying refinance, a home-equity loan meeting the Texas Constitution's requirements, and a qualifying reverse mortgage. So a mortgage, a tax lien, and a valid home-equity lien remain enforceable against the home.

The 522(p) cap on recently acquired homesteads

Texas's unlimited homestead does not override federal bankruptcy law on one key point. Under 11 U.S.C. 522(p), a filer cannot exempt more than a set dollar amount of homestead equity acquired during the 1,215 days (about 3 years and 4 months) before filing. That federal cap is $214,000 for cases filed on or after April 1, 2025, an amount the courts adjust periodically for inflation.

In plain terms, equity you have held in your Texas homestead for longer than 1,215 days can be protected without a dollar limit, but equity you added more recently, for example by buying or substantially paying down a home shortly before filing, is capped at the 522(p) figure. The rule was designed to prevent filers from moving large sums into a homestead just before bankruptcy. A related provision, 11 U.S.C. 522(o), can reduce the homestead where the equity came from non-exempt assets converted with intent to defraud creditors. Confirm the current 522(p) amount for your filing date, because it changes.

Personal property, motor vehicle, and wages

Texas backs up its homestead with an unusually large personal-property exemption. Under Tex. Prop. Code 42.001, a family may exempt personal property with an aggregate fair market value of up to $100,000, and a single adult who is not a member of a family may exempt up to $50,000, in each case excluding liens and security interests on the property. The exemption covers categories listed in Tex. Prop. Code 42.002, including:

• Motor vehicles: one two-, three-, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver's license, or who does not hold one but relies on another person to operate the vehicle.
• Home furnishings, including family heirlooms, and provisions for consumption.
• Tools, equipment, books, and apparatus used in a trade or profession.
• Farming and ranching vehicles and implements, clothing, and certain animals.

Unlike the homestead, these items are subject to the overall $50,000 or $100,000 cap. Texas also exempts most current wages for personal services from garnishment for ordinary debts, and tax-qualified retirement accounts under Tex. Prop. Code 42.0021.

The Chapter 7 means test in Texas

The means test screens who can file Chapter 7. It first compares your household's current monthly income, annualized, against the median family income for a Texas household of the same size. If your income is at or below the Texas median, you generally clear this step. If it is above, you complete the longer calculation that deducts allowed living expenses to see whether you have disposable income that should fund a Chapter 13 plan.

The U.S. Trustee Program publishes the median figures. For cases filed on or after April 1, 2026, the Texas median family income is:

Add $11,100 for each additional person beyond four. These figures apply only to cases filed on or after April 1, 2026, and the U.S. Trustee Program revises them about twice a year, so confirm the figures for your filing date.

Chapter 7 vs. Chapter 13 and the automatic stay

Chapter 7 is a liquidation. A trustee may sell non-exempt property to pay creditors, but because the Texas homestead is unlimited in value and the personal-property exemptions are large, many Texas filers keep everything they own. Most remaining unsecured debt, like credit cards and medical bills, is discharged within about four to six months.

Chapter 13 is a reorganization for people with regular income. You keep your property and repay part or all of your debt over three to five years. It is often used by homeowners who are behind on a mortgage, because the plan can cure the arrears over time and stop a foreclosure, and by filers whose income is above the median.

In both chapters, filing triggers the automatic stay under 11 U.S.C. 362, which immediately stops most collection activity, including foreclosure, wage garnishment, repossession, and collection calls.

Where you file bankruptcy in Texas

Texas has four federal bankruptcy districts, so the correct court depends on where you live. Cases are filed in the U.S. Bankruptcy Court for the Northern District of Texas (Dallas, Fort Worth, Amarillo, Lubbock, Wichita Falls, San Angelo), the Southern District of Texas (Houston, Corpus Christi, McAllen, Brownsville, Laredo, Victoria, Galveston), the Eastern District of Texas (Tyler, Beaumont, Plano, Sherman, Lufkin, Texarkana), or the Western District of Texas (San Antonio, Austin, El Paso, Waco, Midland-Odessa, Del Rio). You file in the district where you have lived for the greater part of the last 180 days. Federal law requires approved credit counseling before you file and a debtor-education course before discharge.

What bankruptcy can and cannot do

Bankruptcy discharges most unsecured debts, but several categories generally survive: most student loans (absent a separate showing of undue hardship), recent income taxes, child support and alimony, and debts from fraud or willful injury. Secured debts like a mortgage or car loan continue if you keep the collateral and keep paying.

Because Texas lets you choose between two exemption systems and its homestead is unlimited in value but bounded by acreage and the federal 522(p) and 522(o) rules, the choice of exemptions and the timing of a filing can meaningfully change what you keep. Many people consult a licensed Texas bankruptcy attorney before filing.