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What are bankruptcy exemptions?

On Behalf of | Sep 27, 2018 | Bankruptcy Exemptions

Working through a bankruptcy from filing to discharge may seem daunting for a Tennessee resident. For example, under Chapter 13 bankruptcy, a debtor may have to find a way to commit much of their disposable income to the repayment of their debts. Under Chapter 7 bankruptcy, they may have to relinquish items of their own property to sell for the repayment of what they owe to their creditors.

It may seem as though bankruptcy is a good way to get out from under oppressive debt, but a person will not be left with anything on which to rebuild their life once the process is over. To prevent bankruptcy filers from having to start completely over once they receive their final discharge, they are allowed to exempt certain items and parcels of property from the bankruptcy processes.

Readers are reminded that Chapter 7, Chapter 13, and other forms of bankruptcy are guided by their own rules and regulations. For this reason, they are asked to discuss the specific exemptions they may claim with their personal attorneys.

However, common forms of exemptions include the debtor’s personal vehicle, their home (if it does not exceed the established value cap of the exemption), and items of personal property. Chapter 13 is somewhat more lenient on what a debtor may protect from bankruptcy than Chapter 7, but a debtor must have sufficient income to repay creditors with the money they take home as income.

Bankruptcy is an extensive process, but it is not intended to deprive a person of everything they own. More specific questions about bankruptcy exemptions should be taken up with an attorney.