There are different ways that the bankruptcy process may be able to protect the filing party's home. This is true in either a Chapter 7 bankruptcy process or a Chapter 13 bankruptcy process so filing parties should be familiar with the different options and how they work.
While a Chapter 13 bankruptcy may be able to help a filing party who is concerned about losing a family home through foreclosure, by allowing them to bring the payments current through their repayment plan worked out with the court, the Chapter 7 bankruptcy process can also provide some protections for the filing party's home. While a home may be something a filing party worries about during the Chapter 7 liquidation bankruptcy process, homestead exemptions can protect at least some of the equity in the filing party's home.
Because there are both federal and state homestead exemptions, and state homestead exemption laws can vary, it is important for the filing party to be familiar with the homestead exemption in their state. In Tennessee, the party filing for bankruptcy can designate up to $5,000 worth of property as homestead or $7,500 if they are not the only party that owns the debt.
Personal bankruptcy options are an important tool to help filing parties enjoy debt relief but also provides important protections for them and their families and can address some of their most important concerns. As a result, it is essential to be familiar with what the different bankruptcy options available to them are and how they may be available to help in different, but important, ways.