Filing Chapter 7 Bankruptcy in Texas

English: Part of Title 11 of the United States...

English: Part of Title 11 of the United States Code (the Bankruptcy Code) on a shelf at a law library in San Francisco. Photographed by user Coolcaesar on March 14, 2009. (Photo credit: Wikipedia)

If you are thinking about filing a Chapter 7 bankruptcy in Texas, there are some things you might want to consider.

A potential bankruptcy filer recently posted this inquiry online on a bankruptcy forum website: “…thinking about filing Chapter 7. [I] have a few questions. Things got really bad around here [over] the holidays; we just got served today [that we] are being sued by Discover card. This was the last straw. We are behind on the house [payments] by almost a month, behind on the motorcycle payment by a couple of months, and like an idiot, I bought a new Dodge Challenger RT the day after Thanksgiving. Am I in danger of loosing the car? My wife has a Ford Fusion. When the trustee comes in your house what kind of things are they going to take? I viewed some threads on here, but I cannot seem to find any clear answers on this. I live in Central Texas. Can anyone recommend a good lawyer? Thanks!!”

The Bankruptcy Process in Texas

Bankruptcy laws are both federal and state, but the federal laws have precedence over state laws. State laws, like those in Texas, are designed to supplement the details of the federal bankruptcy laws.

Since bankruptcy laws are adjudicated in federal bankruptcy courts, the laws are generally administered in a consistent manner. For instance, all filers are required to list their assets when filing for bankruptcy. Therefore, a bankruptcy trustee is not likely to ever have to go into anyone’s house to recover assets. If there are assets to be liquidated by the bankruptcy court, you will retrieve the listed asset or make arrangements to have the asset picked up or delivered.

Not all assets are eligible for a bankruptcy trustee to liquidate in a Chapter 7 bankruptcy. Each state makes their own state exemption laws that will allow you to keep certain assets in order to survive. There are also federal exemption laws for the same, and federal law allows each state to determine which set of laws that apply to bankruptcy cases.

Texas State Exemption Laws

Texas exemption laws for bankruptcy are some of the most liberal laws in the nation. Texas, once considered to be a “debtor’s state,” got its reputation early on in its history.

As a new Republic, Texas advertised in east coast papers hoping to attract debtors in 1836. Because Texas feared an invasion from Mexico, they wanted to increase their settler support. As a result, many debtors came to inhabit Texas and defend their homesteads. People in debt back east would scrawl the initials G.T.T. on their doors, which stood for “Gone to Texas.”

That is one of the contributing reasons today, 100% of your homestead is exempt from liquidation in bankruptcy in Texas, including 10 acres of land you live on in town or 200 acres outside of town.

For a complete set of Texas exemptions for a Chapter 7 bankruptcy, contact us today here at

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