Although Chapter 13 bankruptcy allows a Tennessee debtor to keep their personal property and repay their creditors through a reorganization of their assets and income, Chapter 7 bankruptcy, to some extent, does not. In a Chapter 7 bankruptcy, a debtor is required to sell off or liquidate items of property so that the proceeds may be used to pay off those parties to whom the debtor owes money. With the requirement that property must be sold under Chapter 7 bankruptcy, some debtors may have concerns over what, if any, of their property will get to keep after the process is over.
There are exemptions to the liquidation requirements of Chapter 7 bankruptcy. Generally, the items that a debtor is allowed to keep are those items that are necessary for their continued existence. They may keep the clothing that they need for work and leisure as well as the furnishings in their home that they need to get by. They may also keep a vehicle so that they are able to continue to work and improve their financial situation.
It is possible, though, that limits may be placed on the vehicle the debtor is allowed to maintain. If the debtor has more than one car they may be required to sell the surplus vehicle or vehicles and keep only the one that is the most practical and cost-effective. That is to say, if the debtor has a sedan that they drive to work but a sports car that they like to drive on the weekends, they may keep their commuter vehicle but may have to sell their fun vehicle.
Bankruptcy cases are driven by the unique items of property and the circumstances of the filers’ debt. It is therefore not possible to predict how a particular vehicle will be assessed during the exemption process without more facts. In order to have this and other specific bankruptcy questions answered readers should consult with their bankruptcy attorneys.