Many consumers in Tennessee who are considering the possibility of filing for bankruptcy are concerned about whether they will be at risk of losing all of their property if they do decide to file. It is critical to know that there is no type of bankruptcy filing in which a debtor will automatically lose all of their property. To be sure, even in Chapter 7 bankruptcies, which are liquidation bankruptcies, a debtor should know that there are specific exemptions that allow them to keep certain property up to an allowed amount from being liquidated. In a number of Chapter 7 cases, no assets are liquidated at all due to the debtors not having assets that exceed their exemptions. Then, in a Chapter 13 bankruptcy case, excess assets, over and above the debtor’s exemptions, can be protected rather than liquidated under certain circumstances. As such, in a Chapter 13 case or another type of reorganization bankruptcy, you should not assume that you will automatically lose all of your property because of the bankruptcy filing. In fact, in some circumstances, filing for a reorganization bankruptcy can allow you to keep property that you otherwise might lose without filing for bankruptcy.
Our Nashville & Cookeville bankruptcy lawyers can provide you with more information.
Bankruptcy Exemptions May Allow You to Keep Assets in a Chapter 7 Bankruptcy
Under Tennessee law, consumer debtors who file for Chapter 7 bankruptcy can generally rely on a wide variety of exemptions that allow them to “exempt” property. When property is exempt according to the Tennessee bankruptcy exemptions, the debtor can keep it, and it will not be liquidated as part of the Chapter 7 bankruptcy case. Only non-exempt property can be liquidated. What types of assets should you expect to keep? The following is a list of some exemptions, but it is not exhaustive. As such, you should always speak with a bankruptcy attorney about your circumstances and which assets you should expect will be exempt in your bankruptcy case. Here are some common bankruptcy exemptions in Tennessee:
- Up to $10,000 of personal property of your choosing aside from real estate in an
- Necessary clothing;
- Family photos;
- School books and a Bible;
- Tools of the trade;
- Retirement benefits through the Tennessee Consolidated Retirement System;
- Other retirement and pension plans;
You Have More Options to Protect Assets Because You Filed for Chapter 13 Bankruptcy
In a Chapter 13 bankruptcy case, you have more options to protect your assets versus a Chapter 7 filing. Since this type of bankruptcy is known as a reorganization bankruptcy or a “wage earner’s plan,” a Chapter 7 Trustee is not appointed to liquidate the debtor’s assets over and above the debtor’s exemptions. Instead, the debtor can reorganize his or her debts through a repayment plan, and protect certain assets that otherwise could be liquidated in a Chapter 7 case in certain circumstances. In a Chapter 13 bankruptcy case, the debtor typically makes regular monthly payments over a period of three to five years.
Additionally, when debtors are at risk of home foreclosure or repossession of property associated with secured debts, like a motor vehicle, it may be possible to keep these assets that otherwise could be lost without the bankruptcy filing. The automatic stay can generally stop a foreclosure or repossession action from going forward, upon filing a bankruptcy, and then the debtor can reorganize and catch up on missed payments through the terms of a Chapter 13 repayment plan.
Contact a Middle Tennessee Bankruptcy Attorney
Do you need assistance with a Chapter 7 or Chapter 13 bankruptcy case? Our Middle Tennessee bankruptcy attorneys are here to help. Contact Lefkovitz & Lefkovitz online, or call our lawyers in Nashville at 615-256-8300 or Cookeville at 931-528-5297.