Many people fear that they will lose everything they own once they decide to file for bankruptcy. However, this belief is simply not true, especially in Tennessee. In fact, many people who file Chapter 7 bankruptcy are able to keep a great many of their assets, while at the same time eliminating significant amounts of debt.
For instance, Tennessee law contains several bankruptcy exemptions that you can use to safeguard your property from creditors. Probably one of the most important exemptions in Tennessee is the homestead exemption, which you can use to protect equity in your home. However, the maximum amount you can protect under the homestead exemption can vary greatly depending on your age, marital status and whether you have any dependent children. For example, the cap on Tennessee’s homestead exemption is:
- $5,000 if the property is your principal place of residence
- $7,500 if you jointly own the property, including if you are married, and both you and the other owner (you spouse) use the property as your principal place of residence
- $12,500 if you are unmarried, 62-years old or older and use the property as your principal place of residence
- $20,000 if you are married, 62-years-old or older and have a spouse younger than 62 (or vice-versa), and the two of you use the property as your principal place of residence
- $25,000 if you are married and both you and your spouse are 62-years-old or older, and the two of you use the property as your principal place of residence
- $25,000 if you have at least one dependent minor child living with you and you use the property as your principal place of residence
While Tennessee’s homestead exemption is not as large as some other states, there are ways to maximize its benefits. For instance, even though married couples without kids can typically only exempt up to $7,500, Tennessee bankruptcy courts have determined that married couples with minor children can double the original exemption of $25,000 – meaning they can protect up to $50,000 in home equity.
However, given the many complex rules and statutes that apply to bankruptcy exemptions in Tennessee, it is often best to speak with an experience attorney should you have any questions. A skilled bankruptcy lawyer can explain your options and help determine the best way to protect the maximum amount of assets.