Chapter 7 personal bankruptcy has important protections built into the process. One of the protections includes Chapter 7 bankruptcy exemptions which exempt certain property from the liquidation bankruptcy process. An important exemption to be familiar with the homestead exemption.
Chapter 7 bankruptcy is considered a liquidation bankruptcy process that allows the filing party to liquidate non-exempt assets to repay creditors and enjoy debt relief. Bankruptcy exemptions exempt certain categories of property from this process but are subject to certain limits. Additional wild card exemptions may be available when a property limit is reached or when property does not fall into one of the exempted categories. Exemptions may be available for a house, car, jewelry or other types of property.
One important type of exemption is the homestead exemption. The homestead exemption may allow property owners to protect a portion of the equity they have in their home from the bankruptcy process and from creditors. When homeowners are experiencing financial difficulties, the homestead protection can help protect them. In Tennessee, property owners can protect $5,000 of value as homestead or $7,500 if more than one debtor is involved.
Homestead exemptions can vary by state and jurisdiction so homeowners considering filing for Chapter 7 bankruptcy protection should be familiar with the homestead protections in their state. There are different personal bankruptcy options available to help struggling consumers and homeowners that can provide them with a fresh financial start. Because of this, homeowners should be familiar with how Chapter 7 bankruptcy options would apply to their situation and could benefit them.