If you are looking to get out from underneath an overwhelming amount of debt, but your income prevents you from a reorganization bankruptcy, you may be looking into Chapter 7 bankruptcy. Chapter 7 is known as a liquidation bankruptcy. In liquidation, your property is sold off to get the money to repay your debts.

If you have a car, you know that it is more than just a one-time investment. You have likely put a significant amount of time and effort into repairing your car. You also probably rely on your car to get you to work, doctor’s offices and all of the other places you need to go on a daily basis. The thought of losing your vehicle in bankruptcy may give you pause enough to reconsider filing.

Fortunately, you may not have to give up your car in order to reset your financial situation under Chapter 7.

Chapter 7 exemptions

Bankruptcy is meant to help you regain control of your finances so you can make your situation better. Bankruptcy is not meant to punish you. As such, Chapter 7 does not require you to give up everything you own in order to pay your debts. Bankruptcy laws allow certain items to avoid sale under Chapter 7, known as exemptions.

Federal law defines some property exemptions, but the government allows states to determine whether or not they want to use the federal exemptions or create their own list of exempt property. Under federal bankruptcy law, your primary vehicle is exempt from Chapter 7 liquidation.

According to the National Bankruptcy Forum, Tennessee is one state that has chosen to create its own exemption list, and its list does not include specific language that protects your car from liquidation. The state does, however, allow you to exempt personal property not otherwise included on their list, with a value up to $10,000.

In Tennessee, the court may consider your car personal property, and thus exempt from liquidation, as long as your car is worth less than $10,000 at the time you file for Chapter 7.

Talk it over before filing

As with any form of debt relief, you should review all your options before filing for Chapter 7. An experienced bankruptcy professional can help you better understand your situation and answer any questions you may have about personal property exemptions in Tennessee.