What Exemptions Are You Eligible For Under Chapter 7?
If you are overwhelmed by debt, bankruptcy can be the best way to get your financial life back on track. Chapter 7 bankruptcy is the most common type of consumer bankruptcy.
Chapter 7 bankruptcy is also sometimes called “liquidation.” In some Chapter 7 bankruptcies, nonexempt assets are liquidated – that is to say, sold, converted into cash and used to partially repay creditors before remaining debts are discharged.
The prospect of liquidation can be intimidating. But, you do not necessarily have to give up personal possessions in order to discharge your debts in a Chapter 7 case. Tennessee has a number of generous bankruptcy exemptions that protect a wide range of your property from liquidation. In fact, many Chapter 7 filers do not have to give up any property at all, as everything they own falls under one of the exemptions.
Homestead, retirement and “wild card” exemptions among most important
Many states allow bankruptcy filers to choose between federal exemptions and exemptions under state law. In Tennessee, however, filers must use the state law exemptions.
One of the most important exemptions is the homestead exemption. This exemption protects equity in your house, or in other words, any value that exists in the difference between the amount owed on your mortgage and the market price of your home. For a single filer, the homestead exemption is $5,000, for joint owners it increases to $7,500 and if there is one or more minor children living in the home as a dependent up to $25,000 of equity in a home may be exempted. The homestead exemption is also higher for Tennesseans who are age 62 or older.
The pension exemption can also be very valuable. While fewer workers these days are still receiving a pension in the traditional sense, the contents of 401(k) accounts, IRAs and other types of retirement savings vehicles are also protected under this exemption.
Tennessee’s $10,000 “wild card” exemption is another boon to Chapter 7 filers. This exemption can be applied toward any type of property the filer chooses, including cash.
The three exemptions listed above are among the most common and potentially of the most value, but they are only a few examples of the many bankruptcy exemptions that exist in Tennessee. Some of the others, like those for public benefits or tools of a trade, may be particularly useful given your individual circumstances.
A Tennessee bankruptcy lawyer can help you take full advantage of any applicable exemptions
To learn more about bankruptcy exemptions and to find out how Chapter 7 can help you get out of debt, talk to a Tennessee bankruptcy lawyer. Your lawyer can ensure that you get to keep as many assets as possible in the Chapter 7 process. Call a bankruptcy lawyer today, and get rid of your debt.