At McElroy & Associates, We Understand That Bad Things Can Happen To Good People

Get A Fresh Start Through Bankruptcy

Will you lose your house if you file for bankruptcy?

On Behalf of | Jul 2, 2018 | Chapter 7 Bankruptcy |

If you are like many Tennessee residents, you may be trying to figure out how to start digging yourself out from under overwhelming debt, but you may not have a strong understanding of your options. You may know that bankruptcy is one method many people use to get a fresh financial start, but you may have questions about the bankruptcy process, and whether you will lose your most valued possessions if you file.

Per the Washington Post, there is a common misconception out there that, by filing for bankruptcy, you can automatically kiss your home, your car and your other prized possessions goodbye. This is not, however, always the case, and ultimately, it will depend on several factors, among them the type of bankruptcy filing you follow.

If you file for Chapter 7 bankruptcy, which is the most common filing, by far, you are essentially saying that you do not have money at your disposal to pay off your debts. While you may lose some of your assets in this type of filing, you may or may not have to forfeit your home. Ultimately, it comes down to whether the amount of equity you have in your home is higher or lower than the exemption amount currently allowed in Tennessee.

A Chapter 13 filing, meanwhile, is for people who have at least some disposable income they can put toward their financial obligations. In a Chapter 13 bankruptcy, you must typically devise a payment plan that involves paying off at least some portion of your debts. As long as you can stay current on making payments through the new arrangement, you can typically keep your home.

This information about bankruptcy is educational in nature and not a substitute for legal advice.