We make efforts here on our Tyler Texas bankruptcy law blog to address the pervasive myth that homeowners will automatically lose their homes if they file for bankruptcy. Especially with Chapter 13, filers can generally keep their homes if they can stay up to date on their repayment plans. Even some Chapter 7 filers may be able to keep their homes, thanks in part to Texas’ strong homestead laws.
Homestead laws are intended to help protect people from falling victim to homelessness as a result of the forced sale of their homes. To qualify as a homestead, the property must be either jointly or individually owned — businesses cannot benefit from homestead protection laws. It also cannot be a mobile home, houseboat or other moving property. Only fixed assets like a house or farm are eligible.
The only other qualification for homestead protection in Texas is that the property not exceed 200 rural acres, or 10 urban acres. We are fortunate in Texas that state law only sets this size limit; most states limit eligibility for homestead protection according to the value of the property instead of or in addition to the size of the homestead. These laws are written into our state constitution and were around even before Texas became a state.
Tyler homeowners who are struggling with financial challenges may not be aware of these kinds of legal protections. Their only source of information regarding their debts may be their creditors themselves, and they are likely none too eager to explain the full scope of rights and options available regarding debt relief. Homeowners may want to seek help to learn more about whether Chapter 13 or another type of bankruptcy can help them keep their homes while obtaining a fresh financial start. The above information is provided only as a general background on the law, not as specific legal advice.
Source: FindLaw, “Texas Homestead Laws,” accessed on May 11, 2018