Will I Lose My Property When Filing for Bankruptcy in Tennessee?

There are exemptions for people filing the most common forms of bankruptcy protection (Chapter 7 or Chapter 13 bankruptcy) that may allow you to protect your most important property.

Bankruptcy isn’t designed to throw people on the streets with nothing left and nowhere to start from. Quite the opposite, the whole point of bankruptcy is to provide individuals a path out of a financial death spiral so they can get their feet under them again. That doesn’t mean you won’t have to give up anything, but bankruptcy exemptions will give you a way to safeguard the property that you need to get started again.

Bankruptcy Doesn’t Mean Losing Everything

A lot of people don’t even consider filing for bankruptcy when they are in a serious financial crisis, because they assume that they’ll lose their house, their car, their retirement and their property in the process. Filing for bankruptcy, however, isn’t designed to be a nuclear option, and odds are that you will be able to keep the most important property during the process.

Most states provide people filing for bankruptcy the option of choosing to follow federal or state exemptions, and this is one area where Tennessee operates a little differently. In Tennessee, you must use state exemptions, but those exemptions generally allow the same kinds of opportunity to protect your property.

What Kinds of Things Can I Exempt?

What you can exempt depends on the kind of bankruptcy you’re filing, the most common being Chapter 7 and Chapter 13. These exemptions can include or be used to include:

• Home equity
• Your car
• Clothing
• Health aids
• Health savings accounts
• Tax-exempt retirement accounts
• Some kinds of personal property

When it comes right down to it, the question of what you can protect is best answered by a bankruptcy lawyer. They have experience working with people facing serious financial pressures and can help guide you through the first steps.