If the amount you owe to creditors is overwhelming, you can file for Chapter 7 bankruptcy to discharge most of your debts. In this type of bankruptcy, a person needs to sell some property, like their house or car, to repay their debts. However, if you decide to file, you may keep your house if its value is under Tennessee’s exemption limit.
Houses can be exempted property if their equity is less than the state’s limits. Equity means the total value of the home, minus the liens and mortgages on it. In Tennessee, the limit of the exemption will depend on the filer’s age as well as the people they live with:
- $5,000 for an individual
- $7,500 for a married couple
- $12,500 for an individual over 62 years old
- $20,000 for a couple where one is over 62 years old
- $25,000 for an individual with custody of a minor child
- $50,000 for a couple, both with custody of a minor child
If the equity you have in your home is over the exemption limit, you may lose it. Otherwise, the trustee cannot sell it, and you may keep your home.
Discharging your debt
If your house’s value is under the exemption limit, you may be able to keep your house and, at the same time, wipe out most of your debt. By filing for Chapter 7 bankruptcy, you can eliminate some of the debts that you would need to pay at some point. So if you want to stop the creditors from pursuing you, filing for bankruptcy would be a good option if you don’t find any other way to repay them.