Texas Bankruptcy Laws - Real Estate Value

11 U.S.C. Section 522(d): "The following property may be exempted under subsection (b)(1) of this section: (1) The debtor's aggregate interest, not to exceed $18,450 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor."

Value allowed is determined by equity, based upon a fair market price which may be received by a non-professional seller in the open market. The full text of 11 U.S.C. 522 - federal bankruptcy statutes - is available online through the Cornell University Law School. Values are an opinion based upon subjective analysis, and therefore provide fertile ground for objections filed by trustees, creditors, and parties in interest. In the event of disputed value, after notice and hearing, the court determines a "reasonable value."

Because of the unlimited homestead exemption, Texas bankruptcy laws are unique within all states. Be aware however, effective as of October 17, 2005, federal preemption limits the availability of exempt value in Chapter 7 and 13. The effect of preemption is to replace existing Texas statutes with the federal statute which provides less protection for debtors.

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