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Tennessee bankruptcy discharge basics -- part 2 -- exemptions

Some Tennesseans think that filing for bankruptcy means that the filer will lose everything from their car to their house, to the shirt on their back. But, the reality is much different.

Bankruptcy law aims to get people back on their financial feet. Taking all of a person's property hardly serves that goal. As a result, bankruptcy law provides for a number of exemptions -- property that will be left untouched by the bankruptcy process.

Nonetheless, just because exemptions exist does not mean that a person filing for bankruptcy will automatically benefit from them -- even if their property qualifies. Instead, a filer must list exempt properties in their bankruptcy petition.

Specifically, the property must be provided in the filer's Schedule C. Any property not listed on Schedule C will be fair game for the bankruptcy trustee to sell off to pay creditors.

Because it is so important to list all exempt property on their Schedule C, filers need to know from the onset what property qualifies for a bankruptcy exemption. Figuring that out requires understanding both federal and state law.

Once a filer has figured out which of their properties are exempted, the next step is identifying the value of that property. How valuable a particular property is can affect its level of exempt status in some cases. In other instances, the property can be exempt regardless of how valuable it may be.

Tennesseans interested in learning more about what property is exempt from bankruptcy may benefit from discussing their situation with an experienced bankruptcy attorney. Doing so could be the first step towards a brighter financial future.

Source: USCourts.gov, "Schedule C: The Property You Claim as Exempt," accessed on Jan. 18, 2016

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

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