Property Exempt from Creditor’s Lien by R. Scott Alagood
It should be noted that Texas history is filled with citizens from other states and countries moving to Texas to escape debt and not so friendly debt collection laws, including in some instances, debtor’s prison. For example, William B. Travis avoided arrest in Alabama for unpaid debts by moving to Texas.
As a result, the early Texans were not so fond of government interference in their private matters, including debt-collection. That legacy still exists in Texas today. Obtaining a judgment against a citizen of Texas may be one thing. But collecting it is certainly another.
Chapters 41 and 42 of the Texas Property Code set forth certain property classifications which are “exempt” from execution by a judgment creditor. Execution is the process of forcefully taking the property of a debtor, selling it, and paying the proceeds to a judgment creditor. If the property is exempt, it may not be taken to satisfy a judgment debt.
Chapter 41 of the Texas Property Code deals with exempt real property. Real property includes any permanent improvements and fixtures located on land. Except for certain permitted types of liens and removables, a “homestead” and one or more lots used for a place of burial are exempt from seizure for the claims of a judgment creditor.
In order to qualify as a homestead, the real property (and improvements) must be categorized as either “urban” or “rural”. If a property is “urban”, then the homestead exemption is limited to 10 acres. If a property is “rural”, then for a single adult person the homestead exemption is limited to 100 acres, and for a family the exemption is limited to 200 acres.
A property is considered “rural” if it is not “urban”. A property is considered “urban” if the property is located within the limits of a municipality or the extraterritorial jurisdiction of a municipality or a platted subdivision; and is served by policy protection, paid or volunteer fire protection, and at least 3 of the following services provided by a municipality or under contract to a municipality: (a) electric, (b) natural gas, (c) sewer, (d) storm sewer, and (e) water.
The proceeds from the sale of a homestead continue to be exempt for a period of 6 months following the date of sale.
Chapter 42 of the Texas Property Code addresses exempt personal property. Personal property includes moveable property which is not real property. Certain amounts and types of personal property are exempt from garnishment, attachment, execution, or other seizure. The amount is limited to $100,000.00 of the combined fair market value of the personal property of a family. For a single adult, the exemption amount is limited to $50,000.00.
The following are types of personal property that are exempt so long as the combined value does not exceed the limitations set forth above:
- home furnishings, including family heirlooms;
- provisions for consumption;
- farming or ranching vehicles and implements;
- tools, equipment, books, and apparatus, including boats and motor vehicles used in a trade or profession;
- wearing apparel;
- jewelry not exceeding 25% of the aggregate limits set forth above;
- two firearms;
- athletic and sporting equipment, including bicycles;
- a two-wheeled, three-wheeled, or four-wheeled motor vehicle for each member of a family or single adult who holds a driver’s license or who does not hold a driver’s license but who relies on another person to operate the vehicle for the benefit of the nonlicensed person;
- the following animals and forage on hand for their consumption:
1. horses, mules, or donkeys and a saddle, blanket, and bridle for each;
2. 12 head of cattle;
3. 60 head of other types of livestock; and
4. 120 fowl; and
k. household pets.
Unpaid commission for personal services not exceeding 25% of the limitations set forth above are also exempt from seizure.
The following are the types of personal property that are exempt and their combined value is not included in the limitations discussed above:
- current wages for personal services (except for court-ordered child support payments);
- professionally prescribed health aids of a debtor or a dependent of a debtor.
- alimony, support, or separate maintenance received or to be received by the debtor for the support of the debtor or a dependent of a debtor; and
- bible or other religious book containing sacred writings (excludes a landlord exercising a contractual or statutory right to seize property after a tenant’s breach of a lease or abandonment of the leased premises).
Additionally, certain savings and retirement plans and college savings plans are also exempted from seizure.