Sections of Texas Bankruptcy Code
Property 41.001, 41.002, 41.005
Under Texas bankruptcy law, most consumers filing for bankruptcy protection enjoy a homestead exemption with an unlimited dollar amount if they qualify under the rules. If the homestead is located in a city, town or village, the property cannot exceed 1 acre. For property located outside of a city, town or village, is limited is 200 acres per family.
For example: When filing for bankruptcy, if you live in a 2 acre home in the city of Dallas-Fort Worth, Texas you may not qualify under the Texas homestead exemption even if the 2 acre home was worth very little money. But if you lived in a 1 acre estate in Dallas-Fort Worth, you may qualify under the Texas homestead exemption even if it's worth hundreds of thousands of dollars.
When filing bankruptcy and using the Texas homestead exemption, you must have lived in Texas for 2 years before filing for bankruptcy. If you do not qualify for the Texas homestead exemption because you did not reside in Texas for at least 2 years before filing bankruptcy you can use the Federal homestead exemption which is limited to $125,000. You are also required to use the Federal homestead exemption limit of $125,000 if you purchased the property within 1215 days (3.3 years) prior to filing for bankruptcy.
The value of the homestead exemption may also be reduced if it is determined that the debtor added value to the property with the intent to hinder, delay or defraud creditors during a 10 year period before filing for bankruptcy.
Other Reasons You May Be Forced To Use The $125,000 Federal Limit:
- You are convicted of felony abuse of the Bankruptcy laws.
- The debts owed were caused by violating federal/state securities laws, racketeering, fiduciary fraud, intentional torts or crimes that resulted in death or bodily injury in the pass five years before filing for bankruptcy.
It is important to note that even if you fall into a disqualifying category, you may still be able to get the exemption if the homestead property is deemed "necessary for the support or the debtor and his/her dependents."