How to Protect Your House & Car During a Bankruptcy in Tennessee
Bankruptcy is a powerful federal procedure that can eliminate most if not all of your debts. However, without careful planning you may lose some of your assets in exchange. As with all states, Tennessee determines the amount of property that you as a resident can protect from confiscation in a Chapter 7 bankruptcy. If your assets, such as your house and ca,r are more than the allowable exemptions, you may have to surrender them. In a Chapter 13 bankruptcy, you do not have to worry about state exemption levels, as all of your assets are protected. In exchange, you must develop a payment plan for your creditors.
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Instructions
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Appraise your car and home. For bankruptcy purposes, you can value assets at replacement value or "garage sale" valuations. For your home, use selling prices of comparable homes in your area, or consult a real estate agent. You can use sources such as the Kelley Blue Book to derive an approximate value for your car. The values you assign your assets are critical to determining whether you can keep them during your Tennessee bankruptcy.
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Check current Tennessee bankruptcy exemptions. The state of Tennessee has the right to change exemption values at any time, so verify that you are using current valuations. Tennessee currently offers an exemption value of $5,000 for a homestead, $7,500 if you are joint owners. For your car, Tennessee does not offer a specific vehicle exemption as some other states do. However, you are allowed to exempt up to $4,000 in miscellaneous personal property under the so-called "wild card" exemption. If you are not using this exemption for other property, you can apply it to your vehicle.
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File Chapter 7 if your house and car values are exempt. If your car and home are worth less than the Tennessee exemption levels, you should consider filing Chapter 7 bankruptcy. This way, you can protect those assets without having to pay your creditors any money at all, as you would have to under a Chapter 13 bankruptcy. To protect your assets, list them on Schedule C of the federal bankruptcy forms, "Property Claimed as Exempt."
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Pay the trustee any non-exempt amount. If your house and especially your car are worth only slightly more than the Tennessee exemption amounts, you may be able to pay the trustee for the excess in value and still keep your assets. This will prevent the trustee from having to administer the asset, which takes time and costs money.
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File Chapter 13 if your assets are non-exempt and you cannot make payments to your trustee. If your assets are too valuable for you to keep, you may consider filing Chapter 13 bankruptcy. Although you will have to make payments to the court for the benefit of your creditors for up to five years, you can keep your house and car.
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