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How much is the homestead exemption under Chapter 7?

Tennessee debtors feeling overwhelmed by what they owe to creditors and other entities might not know what to do about their debts. Chapter 7 bankruptcy is often a viable option, but certain concerns will preclude some debtors from moving forward. One issue is what property is exempt, which itemps a person can keep. Knowing what falls into the exempt will provide a foundation as to whether Chapter 7 is the preferable option.

The homestead exemption is in place so the debtor can retain their home, even with a Chapter 7 bankruptcy. The amount that can be protected under the homestead exemption depends on the state in which the filing is done. In Tennessee, the person can designate as much as $5,000 in homestead property if it is an individual debtor and $7,500 if it is more than one.

Older homeowners have different protections. For people over 62, they can get up to $12,500 in homestead exemption. For these individuals, the home must be their main place of residence. If the person is married to someone under age 62, there can be an exemption of up to $20,000. It can be $25,000 if both are older than 62. Homeowners who have custody of at least one minor child can get a $25,000 exemption.

For people who are struggling with debt and seeking debt relief through Chapter 7, the home they live in is a prominent concern. Many are completely unaware of the homestead exemption and think that the words "liquidation bankruptcy" that are attached to Chapter 7 mean they cannot keep anything of value. This is not the case. For assistance with any financial dilemma and guidance on Chapter 7 or other alternatives, a legal professional can provide explanations and advice.

Source: FindLaw.com, "Bankruptcy Exemptions: Chapter 7," accessed on Oct. 3, 2017

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Kenneth C. Rannick, P.C.
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