Have you ever wondered what happens to your home, car, or personal belongings when you file for bankruptcy? You’re not alone. In 2024, more than 500,000 Americans filed for bankruptcy, and one of the first questions many had was: “Will I lose everything I own?”
Fortunately, that’s not how bankruptcy works. Bankruptcy exemptions are designed to protect specific types of property so that individuals can maintain a basic standard of living during and after the process. The question for Texas residents becomes—should you rely on federal exemptions, or stick with the state’s rules?
At the Law Office of Joel Gonzalez, we help people make informed choices when facing financial hardship. Whether you’re dealing with creditor pressure or defending a debt collection lawsuit in Texas, understanding your options is the first step toward real relief.
This blog explains the difference between federal and state bankruptcy exemptions in Texas, how they protect your assets, and how to choose the one that fits your situation best.
What Are Bankruptcy Exemptions?
Bankruptcy exemptions determine what property you get to keep when you file. They’re meant to protect necessities—things like your home, vehicle, clothing, and work tools.
Without exemptions, bankruptcy would mean starting completely from scratch. These rules ensure that while you clear debts, you still retain some financial stability.
Federal vs. Texas State Exemptions: What’s the Difference?
Here’s where Texas offers something unique: you can choose between federal and state exemptions—but not both. That decision can make a big difference in what you’re able to keep.
Texas State Exemptions Include:
- Homestead Exemption: Texas offers one of the most generous in the country. You can protect your entire primary residence, with no value cap, as long as it fits within size limits (10 acres in a city, 100 acres elsewhere).
- Vehicle Exemption: One vehicle per licensed household member is protected.
- Personal Property: Up to $50,000 for families (or $100,000 for heads of household) for things like furniture, clothing, and tools.
- Pensions, retirement accounts, and health aids are also exempt under state rules.
- Federal Exemptions Include:
- Homestead Exemption: Up to a set value (updated every few years; lower than Texas’ unlimited exemption).
- Wildcard Exemption: Lets you protect property that doesn’t fit other categories.
- Vehicle and personal property exemptions that may benefit those without real estate.
Choosing Between the Two: What’s Right for You?
This choice depends entirely on your assets.
- If you own a home with significant equity, the Texas exemption is likely your best bet.
- If you rent or don’t own much property, the flexibility of federal exemptions may offer better protection—especially the wildcard exemption.
- Filing jointly?Spouses can double federal exemptions, which sometimes tips the scale.
That’s why we always recommend evaluating your full financial picture first. Working with a bankruptcy lawyer can help clarify which set of rules will help you keep the most of what you’ve worked hard for.
How Exemptions Affect Your Bankruptcy Case
Whether you’re considering Chapter 7 or Chapter 13, bankruptcy exemptions in Texas will determine how much property stays with you. In Chapter 7, nonexempt assets could be sold to repay creditors. In Chapter 13, they can affect how much you must repay in your plan.
This is why your exemption strategy matters as much as your decision to file in the first place. A debt settlement lawyer near you can help ensure that strategy is sound.
Wondering Which Assets You Can Keep? Let’s Talk About It.
Every financial situation is different. If you’re trying to figure out whether to use state or federal bankruptcy exemptions in Texas, don’t guess—get guidance.
The Law Office of Joel Gonzalez is a debt relief law firm in Corpus Christi, TX, that focuses solely on helping individuals get out from under debt. As a local bankruptcy lawyer, Joel provides clear, one-on-one guidance—no teams, no confusion, just focused help for people facing tough choices.
If you’re looking for a debt settlement lawyer in Corpus Christi, TX, or someone who can help you respond to a debt collection lawsuit, contact Joel Gonzalez today. He’ll explain your options, protect your rights, and help you keep what matters most.
