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Exempt property in a Chapter 7 bankruptcy

When people are facing significant financial challenges, bankruptcy can be a way for them to get the fresh financial start they need. In particular, a Chapter 7 bankruptcy can help eliminate an individual's debt and set them on a different financial path. In a Chapter 7 bankruptcy, property is sold in order to pay debt. The debt that is not paid back is discharged and no longer the responsibility of the debtor.

However, when people hear that property can be sold in a Chapter 7 bankruptcy, they may be taken aback. They may decide Chapter 7 is not best for them because they want to keep some or all of their personal property.

Individuals in Tennessee should understand that not all property will be sold in a Chapter 7 bankruptcy. In fact, federal and state bankruptcy exemption laws are in place to protect debtors in these situations. Exempt property is property that is not subject to sale in a Chapter 7 bankruptcy. This means that individuals can keep property that is exempt and still receive a bankruptcy discharge.

There are many types of property that are exempt under state and federal law. Personal property, for example, is often protected. Personal property can include a person's clothes, personal effects, family pictures, household goods and more. There are also exemptions for a personal automobile and a person's homestead. In other situations, there is a wildcard exemption that allows individuals to keep property of their choosing up to a certain value.

In all these cases, exemptions help individuals start off on the best possible foot following a bankruptcy. It is important for Tennessee residents to understand how exemptions can work in their favor when filing for Chapter 7 bankruptcy. For more information, individual should consider speaking with an attorney.

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Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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