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What are some examples of Chapter 7 bankruptcy exemptions?

When a person in Tennessee thinks about filing for bankruptcy and how it will affect them and their family, it can be an intimidating thought. Most of the intimidation comes from the unknown, as most people aren't well-versed in the in's and out's of bankruptcy law. However, bankruptcy doesn't have to be a negative thing. Bankruptcy can be the lifeline a person needs to get out of the negative cycle of debt.

A misconception that many have about bankruptcy is that it is a process in which it liquidates all of your assets including your home, car, financial accounts and more. However, that is only partially true. If a person is filing for Chapter 7 bankruptcy, there is a clause about bankruptcy exemptions. Exempt property is property that is excluded from the bankruptcy process and allows debtors to keep a portion of assets that are most important to them.

The first bankruptcy exemption that many take advantage of involves the family home. It may be possible to keep part of the equity in your home when filing for Chapter 7 bankruptcy. Other exempt property may include a motor vehicle, jewelry and even pensions, to name a few.

Keep in mind that every item a person lists as exempt cannot be used as a way to help a person get out of debt. Therefore, a person filing for Chapter 7 bankruptcy may want to pick the most important items and potentially liquidate the rest. The goal of Chapter 7 is to get a person out of debt. Listing too many exemptions can be a roadblock to that goal.

Source: FindLaw, "Exempt vs. Non-exempt Property Under Chapter 7," Accessed July 17, 2017

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