File Chapter 7 Bankruptcy and Keep Your Home

A Chapter 7 bankruptcy is also known as a liquidation bankruptcy. This means that any property that a Chapter 7 filer has that is not exempt may be liquidated or confiscated and sold to pay off debts.

If you are considering a Chapter 7 bankruptcy then it is important to know what you can and cannot exempt.

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.

For those filers over the age of 62 Tennessee allows an individual a $12,500 homestead exemption. A spouse aged 62 or older who has a spouse under 62 is allowed a $20,000 exemption. A married couple both of whom are over the age of 62 receive a $25,000 exemption.

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.

If you own a house and are considering filing Chapter 7 bankruptcy you will want to know how much equity you have in your house. If the amount of equity is less than the amount you can exempt, then you can keep your house after filing a Chapter 7 without paying any money and without risk of the Trustee auctioning 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.

Chapter 7 is probably not a good option if you are behind on your mortgage payment. In that case, a Chapter 13 is probably a better alternative for those wishing to keep the home.

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