Chapter 7 bankruptcy in Texas offers some of the most debtor-friendly exemptions in the country — including unlimited homestead protection and one vehicle per licensed household member at full value. Texas consistently ranks among the top five states in total bankruptcy filings, with the Southern District of Texas in Houston and the Northern District in Dallas among the busiest courts in the nation. This guide covers everything you need to know about chapter 7 bankruptcy in Texas for 2026, including income limits, the powerful Texas exemption system, filing costs, and how to file step by step. If you own a home and are behind on mortgage payments, also review chapter 13 bankruptcy in Texas before deciding which path fits your situation.
What Is Chapter 7 Bankruptcy in Texas?
Chapter 7 bankruptcy in Texas is a federal legal process that eliminates most unsecured debts — including credit cards, medical bills, and personal loans — through a court-supervised process typically completed in 4 to 6 months. Unlike Chapter 13, there is no repayment plan required. A court-appointed trustee reviews your assets, but the vast majority of Texas filers keep all of their property. Most Chapter 7 cases in Texas are “no-asset” cases, meaning the trustee finds nothing to liquidate because all property is fully protected by Texas’s generous exemptions.
Texas is one of a small number of states that allows filers to choose between the Texas state exemption system and the federal bankruptcy exemptions. Most Texas homeowners benefit far more from the state system due to the unlimited homestead protection. Renters or filers without significant home equity may benefit from the federal wildcard exemption instead. You must have been a Texas resident for at least 730 days (two years) before filing to use Texas state exemptions.
Who Qualifies for Chapter 7 Bankruptcy in Texas?
To file chapter 7 bankruptcy in Texas, you must pass the bankruptcy means test. This compares your average household income over the past six months to Texas’s median income for your household size. If your income is below the median, you automatically qualify. If it is above, you may still qualify after deducting allowable expenses including housing, transportation, food, and secured debt payments.
The following limits apply to cases filed on or after November 1, 2025. Figures are published by the U.S. Trustee Program and updated approximately every six months.
| Household Size | Annual Income Limit | Monthly Equivalent |
|---|---|---|
| 1 person | $65,123 | $5,427 |
| 2 people | $84,491 | $7,041 |
| 3 people | $96,728 | $8,061 |
| 4 people | $114,938 | $9,578 |
| 5 people | $126,038 | $10,503 |
| 6 people | $137,138 | $11,428 |
For households larger than 6, add $11,100 per additional member. Source: U.S. Department of Justice — U.S. Trustee Program. Next update expected May 2026.
If your income exceeds Texas’s median for your household size, you are not automatically disqualified. The second stage of the means test allows deductions for housing, transportation, food, healthcare, and secured debt payments. Many above-median Texas filers — particularly those with large mortgage payments or car loans in high cost-of-living areas like Austin, Dallas, and Houston — still qualify after these deductions are applied.
Texas Bankruptcy Exemptions in Chapter 7
Texas state exemptions are among the strongest in the country. Current amounts are governed by the Texas Property Code § 41.001 et seq. and Texas Property Code § 42.001 et seq.
| Exemption | Amount | Notes |
|---|---|---|
| Homestead (primary residence) | Unlimited equity | Urban: up to 10 acres. Rural: up to 100 acres (single) or 200 acres (family). Must be primary residence. Sale proceeds exempt for 6 months. If owned less than 40 months, federal cap of $189,050 applies. |
| Motor vehicle | Full value — one per licensed household member | One vehicle per licensed driver in the household, at full fair market value with no dollar cap. Included within the personal property total. |
| Personal property (total cap) | $50,000 single / $100,000 family | Combined cap for all personal property including vehicles, jewelry, firearms, home furnishings, clothing, animals, sporting equipment, and health aids. Up to 2 firearms exempt. |
| Jewelry | Up to 25% of the personal property cap | $12,500 single / $25,000 family — included within the total personal property cap. |
| Wildcard | None under Texas state exemptions | Texas has no state wildcard. If you choose federal exemptions instead, the federal wildcard is $1,675 plus up to $15,800 of unused homestead exemption ($17,475 total). |
| Tools of the trade | Included in personal property cap | Books, tools, equipment, and vehicles used in your trade or profession — counted within the $50,000/$100,000 personal property total. |
| Retirement accounts | Unlimited (ERISA) / $1,711,975 (IRA) | 401(k), 403(b), ERISA-qualified pensions fully exempt. Traditional and Roth IRAs exempt up to $1,711,975 per person (valid April 1, 2025 – March 31, 2028). |
| Wages (head of family) | 100% of current wages | Current wages for personal services are fully exempt for heads of family. Other workers: 75% of disposable earnings or 30x federal minimum wage per week, whichever is greater. |
| Social Security / public benefits | Unlimited | SSI, SSDI, unemployment compensation, workers’ compensation, veterans’ benefits. |
Key strategy note: Texas homeowners should almost always use Texas state exemptions — the unlimited homestead protection is far superior to the $31,575 federal homestead cap. Renters with limited home equity who need flexible protection for cash, bank accounts, or other assets may benefit from choosing the federal exemption system instead, which includes a $17,475 combined wildcard. Consult a Texas bankruptcy attorney before making this choice.
How to File Chapter 7 Bankruptcy in Texas: Step by Step
- Complete credit counseling — Required within 180 days before filing. Must use a U.S. Trustee-approved agency. Cost: $15–$50 (fee waivers available).
- Choose your exemption system — Decide between Texas state exemptions and the federal bankruptcy exemptions before filing. This choice is permanent once the petition is filed.
- Gather financial documents — Last 2 years of tax returns, 6 months of pay stubs, bank statements, complete creditor list, and full asset inventory.
- Complete the bankruptcy petition — Schedules A through J, Statement of Financial Affairs, and means test forms. Official forms at uscourts.gov.
- File with your Texas district court — File in the district covering your county: Northern, Southern, Eastern, or Western. Court filing fee: $338. Fee waivers available for households below 150% of federal poverty guidelines.
- Automatic stay takes effect — All collection calls, lawsuits, wage garnishments, and foreclosure actions must stop immediately upon filing.
- Attend the 341 Meeting of Creditors — Scheduled 3–5 weeks after filing. You answer questions under oath from the trustee. Creditors rarely attend.
- Complete the debtor education course — Required before discharge. Cost: $15–$50.
- Receive your discharge — Most Texas Chapter 7 cases are discharged 60–90 days after the 341 meeting, permanently eliminating qualifying debts.
How Much Does Chapter 7 Bankruptcy Cost in Texas?
| Cost Item | Amount |
|---|---|
| Court filing fee | $338 |
| Credit counseling | $15–$50 |
| Debtor education course | $15–$50 |
| Attorney fees (Texas statewide range) | $1,000–$3,500 |
| Total with attorney | $1,368–$3,938 |
| Total pro se (no attorney) | $368–$438 |
Attorney fees in Texas vary by district and city. Dallas and Houston attorneys typically charge $1,200–$3,500 for a standard Chapter 7 case. Smaller markets and rural districts tend to run lower. Most Texas bankruptcy attorneys charge a flat fee paid in full before filing. Given the complexity of choosing between Texas and federal exemptions, professional guidance is particularly valuable for Texas filers.
What Debts Does Chapter 7 Bankruptcy in Texas Eliminate?
Debts typically discharged in chapter 7 bankruptcy in Texas:
- Credit card balances
- Medical and hospital bills
- Personal loans and payday loans
- Utility arrears
- Old lease obligations after surrendering the property
- Deficiency balances after vehicle repossession
- Some older income tax debts meeting specific IRS criteria
Debts that cannot be discharged:
- Student loans (in most cases)
- Child support and alimony
- Recent income tax debts (generally within 3 years of filing)
- Debts arising from fraud or intentional wrongdoing
- Criminal fines and restitution
- DUI-related injury judgments
Texas Bankruptcy Courts: Where to File Chapter 7 Bankruptcy in Texas
Texas has four federal bankruptcy districts. You must file in the district covering the county where you live. Court information is available at uscourts.gov.
| District | Major Counties / Cities Served | Court Locations |
|---|---|---|
| Northern District | Dallas, Fort Worth, Amarillo, Lubbock, Abilene — 100 counties in northern and central Texas | Dallas, Fort Worth, Amarillo, Lubbock, Abilene, San Angelo, Wichita Falls |
| Southern District | Houston, Corpus Christi, Galveston, Laredo, McAllen, Brownsville — 43 counties | Houston, Corpus Christi, Galveston, Laredo, McAllen, Brownsville, Victoria |
| Eastern District | Tyler, Sherman, Beaumont, Lufkin — 43 counties in eastern Texas | Tyler, Sherman, Beaumont, Lufkin |
| Western District | Austin, San Antonio, El Paso, Waco, Midland | Austin, San Antonio, El Paso, Waco, Midland |
Dallas and Fort Worth residents file in the Northern District. Houston residents file in the Southern District. Austin and San Antonio residents file in the Western District. Tyler and east Texas residents file in the Eastern District.
Alternatives to Chapter 7 Bankruptcy in Texas
- Chapter 13 bankruptcy in Texas — If you own a home and are behind on mortgage payments, Chapter 13 lets you cure arrears through a 3–5 year repayment plan while keeping all property. Best for filers who do not pass the Chapter 7 means test or who have non-exempt assets to protect.
- Bankruptcy cost in Houston — See average attorney fees and court information for Chapter 7 and Chapter 13 in the Houston metro area.
- Bankruptcy cost in Dallas — Compare Chapter 7 and Chapter 13 attorney fees and filing procedures for Dallas-area residents.
Frequently Asked Questions About Chapter 7 Bankruptcy in Texas
Can I keep my house if I file chapter 7 bankruptcy in Texas?
Yes — Texas’s unlimited homestead exemption protects all equity in your primary residence, with no dollar cap. The property must be your primary residence and must not exceed 10 acres in an urban area or 100 acres in a rural area (200 acres for families). You must be current on mortgage payments. If you have owned the home for less than 40 months, a federal cap of $189,050 applies.
Can I keep my car in chapter 7 bankruptcy in Texas?
Texas protects one vehicle per licensed household member at full fair market value — with no dollar cap. If every adult in your household has a driver’s license, every household vehicle is fully protected. The only constraint is that all vehicles are counted within the overall $50,000 (single) or $100,000 (family) personal property cap.
What is the income limit for chapter 7 bankruptcy in Texas?
For cases filed on or after November 1, 2025, the limit is $65,123 for a single-person household and $114,938 for a family of four. Above-median filers with significant mortgage, car loan, or childcare expenses frequently still qualify after the full means test deduction calculation. Current figures are at the U.S. Trustee Program website.
Should I use Texas exemptions or federal exemptions?
Most Texas homeowners should use Texas state exemptions because of the unlimited homestead protection. Renters or filers with little home equity who need flexible protection for cash, bank accounts, or other assets may benefit more from the federal exemption system, which includes a $17,475 wildcard. You cannot mix and match — you must choose one system entirely. Consult a Texas bankruptcy attorney before deciding.
How long does chapter 7 bankruptcy take in Texas?
Most Chapter 7 cases in Texas complete in 4 to 6 months from filing to discharge. The 341 Meeting of Creditors is typically scheduled 3–5 weeks after filing, and the discharge order follows 60–90 days after that meeting.
How long does chapter 7 stay on my credit report in Texas?
A Chapter 7 bankruptcy remains on your credit report for 10 years from the filing date under the Fair Credit Reporting Act.
How much does it cost to file chapter 7 in Texas?
The court filing fee is $338. With an attorney, total costs typically range from $1,368 to $3,938 depending on district and case complexity. Dallas and Houston attorneys charge more than smaller markets. Fee waivers for the court filing fee are available for households below 150% of the federal poverty guidelines.
How soon after chapter 7 can I file again in Texas?
You must wait 8 years from the date of a prior Chapter 7 discharge before receiving another Chapter 7 discharge. You may file Chapter 13 after 4 years from a prior Chapter 7 discharge.