A previous post here discussed exemptions that may protection certain property from the bankruptcy process for Tennessee residents who have filed for a Chapter 7 liquidation bankruptcy, allowing the filing party to liquidate non-exempt assets to repay creditors and enjoy debt relief. The homestead protection, which may provide both state and federal protections, is an important protection for many filers to be aware of.
In most states, a portion of the homeowner’s property can be declared exempt from the Chapter 7 bankruptcy process, which helps filers protect a family home. The homestead exemption can be used to protect a family home from creditors and a forced sale during the Chapter 7 bankruptcy process. In Tennessee, a filing party can commonly designate up to $5,000 of the value of the property for exemption as a homestead; the number increases to up to $7,500 if more than one filing party is involved, such as spouses. If the filing party has custody of at least one minor child, they may claim an exemption up to $25,000.
Additional protections may be available to unmarried filing parties over the age of 62 whose protection may increase to $12,500. If the filing party is married to someone younger than 62, up to $20,000 may be exempted and $25,000 may be exempted if the spouses are both over the age of 62. Federal homestead exemption protections may also be available, which generally protect a portion of the homeowner’s equity in their home, but both state and federal homestead exemption protections may not be claimed together.
Chapter 7 bankruptcy is an option to consider when seeking a fresh financial start and debt relief. It is important to thoroughly understand the details of the process and protections available, which parties considering filing for bankruptcy may not always initially be aware of.
Source: Statelaws.findlaw.com, “Tennessee Homestead Laws,” Accessed Nov. 15, 2016