How Much Cash Can You Keep When Filing Chapter 7 in Texas?

If you are looking to pursue bankruptcy in Texas, you may be wondering, “How much cash can you keep when filing Chapter 7 in Texas?” When individuals find themselves needing to pursue a clean slate from their debts, they want to understand the ways that certain assets can be protected. Fortunately, both federal and Texas state laws governing bankruptcy provide protections through bankruptcy exemptions.

How much cash can you keep when filing Chapter 7 in Texas?

What Is a Bankruptcy Exemption?

A bankruptcy exemption is a legal protection that enables individuals who are filing for bankruptcy to keep certain types and amounts of properties from being liquidated or sold to repay creditors. This is good news for individuals filing for bankruptcy, as this means that they do not have to lose all their assets to get their debts taken care of. Exemptions are created by both federal and state law, and they are intended to preserve a basic standard of living for individuals seeking bankruptcy.

Exemptions can differ between federal and state protections. In most cases, individuals must choose which one to follow based on their unique needs. While each individual case will hold unique requirements and exemptions for paying back creditors, there are general categories of bankruptcy exemptions in Texas that are frequently used by filers, such as the following:

  • Texas Homestead Exemption: This exemption is for real estate property that is the primary residence of the filer, such as a house or condominium. There are several specific requirements within this exemption, such as the size of the property, its location, and the filer’s family size. In general, the Texas homestead exemption is unlimited, while the federal exemption has a set cap.
  • Motor Vehicle Exemption: The motor vehicle exemption covers the value of one motor vehicle per licensed household individual. This exemption value is included in the personal property exemption cap.
  • Personal Property Exemption: In general, this exemption includes things other than real estate and cannot go over specific amounts for both individuals and families. There are many things that can be included in this exemption category, like clothing, food, farming vehicles, firearms, etc.
  • Pension and Retirement Account Exemptions: Pension and retirement accounts, like 401Ks, 403bs, SIMPLE IRAs, traditional IRAs, and Roth IRAs, are protected up to a certain point.
  • Insurance Exemptions: Exemption is offered for life, health, accident, and annuity benefits.
  • Miscellaneous Exemptions: There are exemptions for miscellaneous items, like college savings plans, medical assistance, unemployment benefits, and more.

Each bankruptcy case follows general rules and guidelines, but it can be highly individualized due to your independent financial circumstances. This makes it vital that you consult with a knowledgeable Irving bankruptcy lawyer. They can help ensure that you are making informed decisions that maximize your protections and keep you in line with the rules and requirements for bankruptcy.

Do I Qualify for Chapter 7 Bankruptcy in Texas?

To qualify for Chapter 7 bankruptcy in Texas, the main requirement is that individuals pass the means test, which indicates if their income is less than that of the state median for their household size. To calculate an individual's gross income, they must combine their income from the past six months and multiply by two. If they earn less than the median, they may qualify for Chapter 7 but if they earn over that amount, Chapter 13 may be a better fit.

Chapter 13 bankruptcy is an approach that enacts an official legal agreement to repay creditors within a specific timeframe, typically between three and five years. If the applicant sticks to their repayment plan, certain debts may be forgiven. In Chapter 13, assets are not collected to pay off their debts. Rather, filers pay the debts through their assets and income of their choosing.


Q: What Is the Income Limit for Chapter 7 in Texas?

A: The income limit for Chapter 7 in Texas is dependent on the current average median household income in the state at that time. To qualify for Chapter 7, parties must be making less than the state's median household income for their family size. The income limit on or after April 1, 2024, is $61,460 for a household of one individual, $79.870 for two individuals, and $89,842 for three individuals. There are further figures for larger households.

Q: What Assets Are Exempt From Chapter 7 in Texas?

A: The assets that are exempt from Chapter 7 in Texas are:

  • Homesteads
  • Personal property, like wages
  • Medication
  • Alimony
  • Religious books
  • Burial plots
  • One vehicle per licensed household member
  • Most pensions and retirement accounts
  • Other miscellaneous exemptions

The assets that are exempt can vary between federal or state Chapter 7 exemptions, and individuals can generally choose which one to claim based on what is right for them.

Q: Can I Spend Money While in Chapter 7?

A: You can spend money while in Chapter 7 bankruptcy, but your spending may be monitored to ensure that you are spending reasonably and mainly on necessities. Most purchases of luxuries and non-essentials are viewed as irresponsible during bankruptcy proceedings. If it affects repayment to creditors, there may be negative repercussions. It is helpful to keep an accurate record of your spending during Chapter 7 to demonstrate transparency and accountability.

Q: How Do I File Chapter 7 If I Make Too Much Money?

A: You can file for Chapter 7 if you make too much money under special and unique circumstances, but you may be referred to Chapter 13 bankruptcy as an alternative to Chapter 7. If your income is above the designated allotment, but you can prove that you have extenuating circumstances that affect the repayment of your debts, you may be able to officially qualify for Chapter 7 bankruptcy. It is helpful to first consult with a bankruptcy attorney to understand your options.

Contact a Local Bankruptcy Lawyer Today

At Steele Law Firm, PLLC, we offer compassionate legal support that is results-driven for those who are seeking bankruptcy in Texas. We offer bankruptcy advice that you can trust and, if you find yourself in a helpless situation, you owe it to yourself to seek the essential services that we offer. You can reset and restart your financial situation by filing for Chapter 7 or Chapter 13 bankruptcy today. Reach out to us to set up a consultation to learn how.

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