Chapter 7 versus Chapter 13
Chapter 7 is a liquidation case. Non-exempt property may be sold by a trustee, and eligible unsecured debts are discharged, often within a few months. Eligibility depends in part on the means test, which compares household income to the Texas median for the household size.
Chapter 13 is a reorganization over a three- to five-year plan. It is commonly used to cure a mortgage arrearage, to keep property that would not be exempt, or when income is too high for Chapter 7.
The Texas homestead exemption
Texas Property Code Chapter 41 protects the homestead without a dollar cap, limited instead by acreage: generally up to 10 acres for an urban homestead and up to 100 acres (200 for a family) for a rural homestead.
Federal law imposes timing rules on recently acquired homesteads, so how long you have owned the property in Texas can affect the protection available in a bankruptcy case.
Personal property protections
Chapter 42 of the Texas Property Code protects personal property up to an aggregate value — commonly cited as $100,000 for a family and $50,000 for a single adult — covering categories such as home furnishings, tools of the trade, a vehicle per licensed driver, and certain livestock.
Most retirement accounts and current wages receive separate protection under Texas law.
What bankruptcy does not erase
Domestic support obligations, most student loans, most recent tax debt, and debts arising from fraud or willful injury generally survive a discharge.
The automatic stay stops most collection activity, wage garnishment, and foreclosure the moment the case is filed, but it has limits and can be lifted on motion.
Key Texas terms
- Automatic stay: The injunction that halts most collection activity when a bankruptcy petition is filed.
- Means test: The income comparison determining Chapter 7 eligibility, measured against Texas median income.
- Exemption: Property a filer is allowed to keep. Texas filers may elect the Texas scheme instead of the federal one.
Frequently asked questions
Will I lose my house if I file bankruptcy in Texas?
Texas has an unlimited-value homestead exemption limited by acreage, so many filers keep their homes. You still must stay current on the mortgage, and federal timing rules can apply to recently purchased homesteads.
How long does bankruptcy stay on a Texas credit report?
A Chapter 7 generally reports for up to 10 years from filing and a Chapter 13 for up to 7 years. Credit scores often begin recovering well before those periods end.
Does bankruptcy stop child support in Texas?
No. Domestic support obligations are not dischargeable and the automatic stay does not stop the establishment or collection of child support.