What You Can Keep After Bankruptcy in Knoxville

Knoxville Bankruptcy Attorney

When you are filing for Chapter 7 bankruptcy in Knoxville, you will need to have a good understanding of your options for bankruptcy exemptions. Bankruptcy exemptions are items that remain exempt from being sold in order to discharge your debts.

If the debtor is a person with very few assets, they may be allowed to keep most of their items. For those who do have assets and a lot of property, some things will have to be given up in the bankruptcy process. The amount of assets you possess will dictate how many or how few things you can keep when filing for bankruptcy, which can greatly affect one's decision for filing for either Chapter 7 or Chapter 13.

In Tennessee, an individual debtor is allowed to claim up to $10,000.00 worth of "personal property" as "exempt" (married debtors filing jointly are allowed a total of $20,000.00 in exemptions). Personal property that is exempt cannot be taken by a Trustee and sold to pay back creditors.

"Personal property" are things such as cash, certificates of deposit, furniture, etc. Motor vehicles (such as cars, boats, motorcycles, etc.) are also considered personal property. However, only the "equity" you have in such motor vehicles is considered your personal property. Therefore, if you owe more on a car than it's worth, you have no equity in the car. Any equity you have in your personal property would need to be covered by your allowable exemption amount to that a Trustee would not seek to sell the property.

"Real property" are things such as land, homes, etc. Debtors are also allowed, under Tennessee law, to declare a certain amount of their home (their primary residence) as exempt. The amount of "homestead exemption" you are afforded depends upon things such as your age, marital status, whether you have minor dependents, etc.

Protecting Your Property and Assets

After filing Chapter 7 bankruptcy, one may retain any assets that are considered exempt, like their home/estate. In most cases, a debtor will not lose a majority of their personal property. Many important exemptions are in place to protect consumers' rights. Federal law allows for certain exemptions of assets that will not go to a trustee. Following a careful review of a debtor's non-exempt assets, if any, a lot of the time there are no sufficient funds left with which to pay for anything more than administration costs; in that instance, the creditors will receive nothing. 

The bankruptcy lawyers of Saffa Law Group, P.L.L.C., will be able to help you identify your exempt and non-exempt assets.  Federal Law allows exemptions which include workers compensation awards, college funds that have been prepaid, 401K and pension funds, (a portion of) your house/home, Supplemental Security Income (SSI) or disability income, and cars (a portion of, but often they are totally exempt).

Limitations to these exemptions do exist; however, the majority of consumers are able to maintain ownership over all of their belongings while still eliminating their debt. Non-exempt property of the estate is what is used to pay the respective creditors. This can be comforting news to someone in dire need of a break from financial strife!