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Does bankruptcy mean giving up everything?

Many Tennesseans understand the basic contours of bankruptcy. They know that bankruptcy is a process in which a person can cancel their debts. But, along the way to eliminating those debts, many misconceptions exist. One area that often trips people up is just what property they will need to sell off to pay down their debts. To better understand which property is subject to bankruptcy and which is exempt, keep reading.

The first thing to realize is that bankruptcy does not require people give up everything. Indeed, bankruptcy leaves many forms of property untouched. The law has established these bankruptcy exemptions for the common-sense reason that bankruptcy is supposed to be a hand up. If, on the other hand, the process tried to take every last stitch off a person's back, the process would be anything but a springboard to future success.

Keeping that principle in mind, Tennessee has several important exemptions. The first is the homestead exemption, which exempts a certain dollar figure for a person's house. How big the exemption is depends on a person's age, whether they own the property individually or jointly and whether they have any minor dependent. This exemption could be worth up to $25,000.

A second exemption is for wages. Specifically, bankruptcy cannot touch either 70 percent of a person's disposable weekly earnings or 30 times the federal minimum hourly wage, whichever number is greater. In some cases, a bankruptcy judge can even increase the number further.

A third exemption is for other property. These "others" include clothing, burial plots, Bibles, family pictures and properties as well as up to $10,000 in personal property, including funds in bank accounts.

Understanding exemptions can be crucial to maximizing the effectiveness of a bankruptcy. To learn more about making the most of these exemptions, Tennesseans may benefit from speaking with an experienced bankruptcy attorney.

Source: Legal Consumer, "Tennessee Bankruptcy Law - State Exemptions," Accessed April 10, 2016

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

Toll Free: 888-376-0282
Phone: 423-933-1606
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