It is a sad reality of modern American life that it presents many opportunities to fall into debt. Whether one owes money to credit card companies, hospitals or other medical professionals, or has gotten behind on mortgage payments, being in debt is generally no fun. A period of unemployment, failure of a business, or a chronic sickness can all be factors in creating such a situation for Tennessee residents.
About a month ago, we touched on the fact that those in heavy debt may look to the bankruptcy code for relief from some of the crushing financial effects such circumstances can bring about. While some of a bankruptcy filer’s property may be at risk of being sold to pay debts, there are ways to protect certain things from creditors.
One of these ways is the ‘wildcard’ exemption, that allows a Tennessee resident to protect up to $10,000 of personal property from liquidation in a bankruptcy. There is, however, in the second paragraph of the statute authorizing this exemption, an exception. Basically, the law does not allow a debtor to protect an item of personal property from bankruptcy sale if that item was purchased or maintained with money that was obtained by fraud. To except a piece of property from the personal property exemption, the bankruptcy court must find fraud by a preponderance of the evidence.
Creditors may be tempted to accuse a debtor of fraud in order to be able to reach certain personal property for the purposes of satisfying the debts they are owed. Of course, such creditors will have to convince the court that this was the case. Those who are thinking of filing for bankruptcy may wish to consider contacting an experienced Tennessee attorney with questions about how such bankruptcy exemptions may apply to their own situations.