Like many people going through the bankruptcy process, you are likely concerned about which of your possessions and how much of your money you will be allowed to keep. If you have been awarded a recovery as the result of a personal injury claim, you may be particularly worried about whether or not you will be able to keep the funds you were compensated with. At Rothschild and Ausbrooks, PLLC, we understand that your belongings are important to you and that every penny counts when things are tight.
Bankruptcies in Tennessee allow for certain personal exemptions. Therefore, there are certain assets that you are allowed to keep that will not be included as part of your bankruptcy. The good news is that there is an exemption in place for personal injury awards.
With a Chapter 7 bankruptcy, any eligible assets are liquidated by the court and used to pay off your debts. Therefore, if you are filing for Chapter 7, and your personal injury award was greater than the cap of $7,500, anything above that amount may be fair game for the bankruptcy court.
That is not necessarily the case with Chapter 13, however. With a Chapter 13 bankruptcy, you will be required to make monthly payments as part of the plan to settle your debt. As long as you can afford to make that payment each month, you will be able to keep many of your assets, including your personal injury recovery. Therefore, if your injury settlement is important to you and you meet the requirements for filing for Chapter 13 that may be your best option for holding onto what you were awarded. For more information on what assets you can retain during a bankruptcy, please visit our web page.