California AB 1885, effective January 1, 2021, overhauled the state's homestead exemption by replacing the prior fixed amounts with a formula tied to the county median home sales price — resulting in exemptions that now commonly exceed $600,000 in high-cost areas. For debtors filing Chapter 7 bankruptcy in California, this dramatically changes whether home equity is reachable by a bankruptcy trustee. Five years of case law have refined the calculation and application rules that practitioners must know.
Texas's homestead exemption is constitutionally protected and unlimited in dollar value — a feature that makes Texas a favored jurisdiction for high-net-worth debtors in bankruptcy planning. But recent federal court decisions have aggressively applied the fraudulent transfer provisions of the Bankruptcy Code to challenge homestead conversions made within ten years of filing, and trustees are winning some of those battles. Bankruptcy attorneys practicing in Texas need to understand both the breadth of the exemption and its limits.
Texas offers some of the most generous bankruptcy exemptions in the country. Understanding homestead, vehicle, and retirement exemptions can mean the difference between keeping and losing key assets.