A Chapter 7 Bankruptcy is designed to give you a fresh start by discharging your debts. But some property that is not exempt may be sold in order to pay off creditors.
It is imperative that you know what property is exempt, and therefore property you can keep, and what property is not exempt before you file a Chapter 7 bankruptcy.
Tennessee exemption laws allow a single person to keep up to $5,000 of their home’s value. While married couples can exempt up to $7,500.
Tennessee law exempts up to $12,500 of the value of a home if the individual filing bankruptcy is 62 years of age or older. If a married couple files a Chapter 7 and one spouse is 62 years of age or older and the other spouse is under 62 years old Tennessee laws provides for up to a $20,000 exemption. If both spouses are 62 or older the exemption rises to $25,000.
Tennessee law grants a $25,000 homestead exemption for an individual filing a Chapter 7 who has at least one dependent child. This exemption doubles to $50,000 when a married couple with at least one dependent child files a Chapter 7.
The amount of equity in your house is important to know when considering Chapter 7. If your exempted amount is more than your equity then there is no chance a Chapter 7 Trustee will seek to sell your house to pay creditors.
If the equity in your house is more than the amount you are entitled to exempt then you will have to pay the difference between the equity minus the exemption, or you will risk losing your house when you file a Chapter 7 bankruptcy.
If you are behind on your house payment then Chapter 7 might not be the best option. A Chapter 13 repayment plan would ensure you retain possession of your home.
{ 0 comments… add one now }