Too many low-wage earners who could benefit from filing for bankruptcy shy away from the process because they’ve heard that doing so will cost them their property. This is a myth. In reality, Chapter 13 filers don’t risk the liquidation of their non-exempt assets and the vast majority of Chapter 7 filers retain ownership of all of their assets, as well.
Essentially, the myth that a filer will “lose everything” if they file for bankruptcy protection stems from the fact that the trustees who are assigned to Chapter 7 cases are empowered to sell filers’ non-exempt assets. However, most filers either don’t own non-exempt assets or the ones they do own are of such minimal value that it isn’t worth a trustee’s time to attempt to sell them.
Taking advantage of exemptions
In many states, Chapter 7 bankruptcy filers are permitted to choose between filing federal exemptions and state exemptions. In these states, filers cannot mix and match the exemptions they want to utilize but they can make an informed decision about which approach would best serve their personal circumstances.
Tennessee is not one of those states. Tennessee law requires filers to use the state’s exemption scheme. As a result, it is important for Tennessee filers to seek legal guidance in order to better ensure that they are taking advantage of every exemption that they can. In doing so, they’ll minimize the risk that any of their assets will be sold by their case’s trustee for the benefit of their creditors.
Seeking legal guidance can also help filers to better understand how to utilize the state’s $10,000 wildcard exemption most effectively.