Filing for bankruptcy can be a difficult decision, especially when your home is at stake. If you’re considering bankruptcy in Tennessee, understanding how it might impact your home is crucial. At Kenneth C. Rannick, P.C., we help Chattanooga residents navigate these complex situations and protect what matters most.

Chapter 7 Bankruptcy and Your Home

Chapter 7 bankruptcy is often referred to as "liquidation bankruptcy" because a trustee can sell non-exempt property to pay off creditors. However, Tennessee law allows for homestead exemptions—protections that may let you keep your home.

In Tennessee, the homestead exemption amount varies depending on your circumstances:

• $5,000 for a single filer
• $7,500 for a married couple filing jointly
• $25,000 if you have minor children living with you
• Up to $100,000 for individuals over 62 or who are disabled (specific conditions apply)

If your equity in the home is within the exemption limit, and you are current on your mortgage, you may be able to keep your home even in a Chapter 7 bankruptcy. However, if your equity exceeds the exemption or you're behind on payments, the trustee could sell the home to repay creditors.

Chapter 13 Bankruptcy and Your Home

Chapter 13 is a reorganization bankruptcy that allows you to catch up on missed mortgage payments through a 3- to 5-year repayment plan. As long as you continue making mortgage payments and stay current on your bankruptcy plan, you can usually keep your home.

This option is especially beneficial for those who have fallen behind but still want to avoid foreclosure. Chapter 13 also provides more flexibility if your equity exceeds the state exemption limit.

Additional Considerations

• Foreclosure proceedings: Filing for bankruptcy triggers an automatic stay, which temporarily halts foreclosure actions.
• Second mortgages: In some Chapter 13 cases, you may be able to remove a second mortgage if your home’s value is less than what you owe on your first mortgage.

Talk to a Chattanooga Bankruptcy Attorney

Bankruptcy doesn’t always mean losing your home. With proper planning and guidance, you may be able to protect your most important asset. At Kenneth C. Rannick, P.C., we are committed to helping individuals in Chattanooga understand their rights and make informed decisions.