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Chapter 7 bankruptcy and exemptions

On Behalf of | Jul 20, 2022 | Chapter 7 Bankruptcy |

When debts become overwhelming, it could be wise to look at monthly obligations compared to income. Tennesse residents might find themselves covering not only credit cards and loans but also mortgage payments, auto loans, food bills, insurance, and more. Some may wonder if filing for Chapter 7 bankruptcy is worthwhile, but they fear liquidating specific assets might leave them with nothing. Reviewing the current asset exemption list might put those concerns to rest.

Exemptions and Chapter 7 bankruptcy

With Chapter 7 bankruptcy, those who pass the means test may seek to have specific debts discharged. Discharging debt follows the liquidation of some assets to pay creditors. Not all debt is eligible for any discharge, and some assets are not subject to liquidation.

Not surprisingly, bankruptcy filers may wonder if they will lose their cars or homes when filing for Chapter 7. Reading the exemption list might provide some assurances, as houses and cars fall under the exemption rule. However, the exemption amount has a threshold and is not unlimited.

In Tennessee, a homestead exemption exists for property owners. Be mindful that state and federal exemption amounts vary.

Learning bankruptcy rules

Reviewing the specific exemption amounts available under Chapter 7 bankruptcy might give debtors more confidence to move forward and file. Debtors may not realize some exemptions affect their work life. Some professionals rely on tools, communication devices or computers to make a living. An exemption amount may protect a portion of these items, helping the debtor continue working.

Filing for Chapter 7 could make it possible to restart a financial life. Constantly dealing with massive debt might make financial stability impossible.