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Will I lose my home if I file for Chapter 7 bankruptcy?

Your home can offer you and your family a great deal of stability. However, when people have struggled with debt and wonder whether bankruptcy can offer relief, it can leave them wondering whether they will lose their house in the process. Will you lose your house during the bankruptcy process, or can you protect this important part of your life?

Your home may be exempt from the bankruptcy process.

Just as property like your vehicle, the tools you need for work, your clothing and your pension are exempt from the bankruptcy process, exemptions are available for your home. In Texas, homesteads of up to 10 acres in cities, towns or villages, 100 acres for individuals in rural areas and 200 acres for families in rural areas are eligible for a homestead exemption. Unlike many states which limit the amount of equity that qualifies for exemption, Texas offers an unlimited exemption for these homesteads.

Other real estate holdings might not qualify for exemptions.

While Texas law offers generous exemptions for a person’s homestead during the bankruptcy process, this exemption does not apply to all real estate. Second homes, vacation homes or other properties, for example, are not considered a person’s homestead and would not qualify for an exemption as a result.

People who have recently moved to Texas may not be able to access the full exemption amount. If you have been in your home for less than 40 months, federal law limits the amount of equity that qualifies for an exemption in the bankruptcy process.

If you wonder whether you will be able to protect your home during the bankruptcy process, it may help to carefully consider your legal options before filing. The right legal strategy can protect your house while laying the groundwork for a strong financial future.


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