A Chapter 7 bankruptcy is also known as a liquidation bankruptcy. This means that any property that a Chapter 7 filer has that is not exempt may be liquidated or confiscated and sold to pay off debts.

One of the main points to consider in deciding whether to file a Chapter 7 bankruptcy is what property you can keep and what property you may have to give up.

Tennessee exemption laws allow a single person to keep up to $5,000 of their home’s value. While married couples can exempt up to $7,500.

Tennessee grants an exemption up to $12,500 for individuals over the age of 62. A $20,000 exemption applies to married couples where one spouse is over 62 and the other under 62. A larger $25,000 exemption applies to married couples where both spouses are over 62.

Tennessee law grants a $25,000 homestead exemption for an individual filing a Chapter 7 who has at least one dependent child. This exemption doubles to $50,000 when a married couple with at least one dependent child files a Chapter 7.

The amount of equity in your house is important to know when considering Chapter 7. If your exempted amount is more than your equity then there is no chance a Chapter 7 Trustee will seek to sell your house to pay creditors.

Filing Chapter 7 when your equity exceeds you allowed exemption may result in either yu having to pay the difference to your creditors or the Chapter 7 Trustee selling your house and paying creditors with the proceeds, minus your exempted amount.

The last point to consider is that you usually do not want to file a Chapter 7 if you are behind on your mortgage payments. When you are behind on your mortgage, a Chapter 13 might be a better option for someone wanting to keep their home.

A Chapter 7 Bankruptcy is designed to give you a fresh start by discharging your debts. But some property that is not exempt may be sold in order to pay off creditors.

If you are considering a Chapter 7 bankruptcy then it is important to know what you can and cannot exempt.

Each state has different exemption rules. In Tennessee a single individual can exempt $5,000 of their homestead (house) while a married couple can exempt $7,500.

For those filers over the age of 62 Tennessee allows an individual a $12,500 homestead exemption. A spouse aged 62 or older who has a spouse under 62 is allowed a $20,000 exemption. A married couple both of whom are over the age of 62 receive a $25,000 exemption.

Tennessee law grants a $25,000 homestead exemption for an individual filing a Chapter 7 who has at least one dependent child. This exemption doubles to $50,000 when a married couple with at least one dependent child files a Chapter 7.

If you own a house and are considering filing Chapter 7 bankruptcy you will want to know how much equity you have in your house. If the amount of equity is less than the amount you can exempt, then you can keep your house after filing a Chapter 7 without paying any money and without risk of the Trustee auctioning your house to pay creditors.

In the case where your exemption is less than your equity then you have two choices; pay the difference to the Chapter7 Trustee, or allow the Chapter 7 Trustee to sell your house.

If you are behind on your house payment then Chapter 7 might not be the best option. A Chapter 13 repayment plan would ensure you retain possession of your home.