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File Chapter 7 Bankruptcy and Keep Your 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.
It is imperative that you know what property is exempt, and therefore property you can keep, and what property is not exempt before you file a Chapter 7 bankruptcy.
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 law exempts up to $12,500 of the value of a home if the individual filing bankruptcy is 62 years of age or older. If a married couple files a Chapter 7 and one spouse is 62 years of age or older and the other spouse is under 62 years old Tennessee laws provides for up to a $20,000 exemption. If both spouses are 62 or older the exemption rises to $25,000.
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 know the amount of equity you have in your home then you can determine the likelihood of a Chapter 7 Trustee trying to sell your home in a Chapter 7 bankruptcy. If your equity is less than your entitled exemption your creditors and Chapter 7 Trustee will nto be able to sell your home.
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.
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.
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