When you are in overwhelming debt, it can be incredibly difficult to make ends meet without falling further behind on payments. As such, you may decide that filing Chapter 7 bankruptcy is in your best interest. However, you may be hesitant to do so out of fear that you will lose all of your personal property. If this reflects your circumstances, the following blog explores what you should know about these matters, including whether or not you can protect your assets and the importance of working with a Memphis, TN Chapter 7 bankruptcy lawyer to help guide you through these complex and overwhelming matters.
What Happens During Chapter 7 Bankruptcy?
During a Chapter 7 bankruptcy, you will begin a liquidation process in which your assets will be seized and sold to eliminate debt in your name.
It’s imperative to understand that if you wish to declare Chapter 7 bankruptcy, you must first pass a means test. Essentially, this compares your annual income to that of other similarly sized households in your state. If you meet the requirements, you will be eligible to pursue this process in Tennessee. In the event your income is too high, you may be able to apply certain deductions to qualify, or you may have to pursue a Chapter 13 filing, in which you will be placed on a three to five-year repayment plan.
Will I Lose My Personal Property?
As this process depends heavily on the trustee assigned to your case seizing non-exempt assets to repay debts, you may worry that you will lose all of your personal property. However, it’s critical to understand that you may have a number of exemptions in place to help remove certain property from your bankruptcy estate. You should note, however, that while both federal and state exemptions exist, the state of Tennessee requires filers to use the state exemptions.
As such, you are eligible to protect up to $10,000 in vehicle equity and up to $10,000 in personal property like furniture, household items, and clothing.
You should note, however, that some luxury properties may not qualify, as they may be considered non-exempt due to their high value. As such, you should discuss any designer items, collections, or high-value jewelry you own with an attorney to help you understand what to expect during this process.
Does This Process Impact Marital or Joint Assets?
In the event you are married or are the co-owner of assets, you may worry about the impact that bankruptcy may have on this property. However, Tennessee recognizes a standard known as “tenancy by the entirety,” which essentially means that both spouses are considered a legal entity in terms of shared property. As such, if you are filing for bankruptcy without your spouse, most joint assets will be protected. This is because the state cannot force the sale of jointly owned property to repay the debts of one party.
As you can see, navigating the bankruptcy process when you have concerns about how your personal assets will be handled can be incredibly overwhelming. However, it’s critical to understand that you do not have to go through this process alone. At the Arnold Law Firm, we understand how upsetting it can be to declare bankruptcy, which is why we will do everything possible to help guide you through this process so you can reap the full benefits of receiving a financial fresh start. When you need help, our team is here. Contact us today to learn more.
