Personal bankruptcy protections are important for struggling homeowners and struggling consumers alike. There are additional protections built into the bankruptcy process, including bankruptcy exemptions, which is why filing parties and those considering bankruptcy should be familiar with the homestead bankruptcy exemption and how bankruptcy exemptions work.
Generally, bankruptcy exemptions are available as part of a Chapter 7 bankruptcy and provide protection for certain categories of property from the bankruptcy process. Chapter 7 bankruptcy is considered a liquidation bankruptcy option which allows the filing party to liquidate non-exempt assets to repay creditors. Certain exemptions can be used to exempt property from the process so it is important for filing parties to understand the different exemptions.
In Tennessee, as in other states as well, a homeowner can declare a portion of their home homestead and protect it from the bankruptcy process and creditors. In Tennessee, up to $5,000 of the filing party's property may be exempted and up to $7,500 if there is more than one party filing for bankruptcy. Additional protections may be available for older Tennesseans over the age of 62 who are also unmarried; they may be able to exempt up to $12,500 of their property under the homestead exemption. Depending on the circumstances, the protections may increase.
Familiarity with personal bankruptcy protections is valuable for struggling homeowners and consumers who should also be aware of the different layers of protection available to them through the bankruptcy process. Legal resources are at their fingertips which it is important for those struggling with debt to understand.