Can You Keep Your Home Filing a Chapter 7 Bankruptcy?
1:02 AM
A Chapter 7 bankruptcy is also known as a liquidation bankruptcy. This means that any property that a Chapter 7 filer has that is not exempt may be liquidated or confiscated and sold to pay off debts.
One of the main points to consider in deciding whether to file a Chapter 7 bankruptcy is what property you can keep and what property you may have to give up.
Each state has different exemption rules. In Tennessee a single individual can exempt $5,000 of their homestead (house) while a married couple can exempt $7,500.
Tennessee grants an exemption up to $12,500 for individuals over the age of 62. A $20,000 exemption applies to married couples where one spouse is over 62 and the other under 62. A larger $25,000 exemption applies to married couples where both spouses are over 62.
Tennessee law grants a $25,000 homestead exemption for an individual filing a Chapter 7 who has at least one dependent child. This exemption doubles to $50,000 when a married couple with at least one dependent child files a Chapter 7.
The amount of equity in your house is important to know when considering Chapter 7. If your exempted amount is more than your equity then there is no chance a Chapter 7 Trustee will seek to sell your house to pay creditors.
If the equity in your house is more than the amount you are entitled to exempt then you will have to pay the difference between the equity minus the exemption, or you will risk losing your house when you file a Chapter 7 bankruptcy.
The last point to consider is that you usually do not want to file a Chapter 7 if you are behind on your mortgage payments. When you are behind on your mortgage, a Chapter 13 might be a better option for someone wanting to keep their home.
One of the main points to consider in deciding whether to file a Chapter 7 bankruptcy is what property you can keep and what property you may have to give up.
Each state has different exemption rules. In Tennessee a single individual can exempt $5,000 of their homestead (house) while a married couple can exempt $7,500.
Tennessee grants an exemption up to $12,500 for individuals over the age of 62. A $20,000 exemption applies to married couples where one spouse is over 62 and the other under 62. A larger $25,000 exemption applies to married couples where both spouses are over 62.
Tennessee law grants a $25,000 homestead exemption for an individual filing a Chapter 7 who has at least one dependent child. This exemption doubles to $50,000 when a married couple with at least one dependent child files a Chapter 7.
The amount of equity in your house is important to know when considering Chapter 7. If your exempted amount is more than your equity then there is no chance a Chapter 7 Trustee will seek to sell your house to pay creditors.
If the equity in your house is more than the amount you are entitled to exempt then you will have to pay the difference between the equity minus the exemption, or you will risk losing your house when you file a Chapter 7 bankruptcy.
The last point to consider is that you usually do not want to file a Chapter 7 if you are behind on your mortgage payments. When you are behind on your mortgage, a Chapter 13 might be a better option for someone wanting to keep their home.
About the Author:
Alan Alder is a Tennessee licensed attorney. He has been practicing Chapter 7 bankruptcy in Middle Tennessee for over five years. Learn more by visiting his Tennessee bankruptcy attorney website.
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