A Chapter 7 Bankruptcy is designed to give you a fresh start by discharging your debts. But some property that is not exempt may be sold in order to pay off creditors.

One of the main points to consider in deciding whether to file a Chapter 7 bankruptcy is what property you can keep and what property you may have to give up.

In the state of Tennessee a person is entitled to exempt up to $5,000 of the value of their home. If a married couple file a Chapter 7, then they can exempt up to $7,500 of the value if their home.

Tennessee law exempts up to $12,500 of the value of a home if the individual filing bankruptcy is 62 years of age or older. If a married couple files a Chapter 7 and one spouse is 62 years of age or older and the other spouse is under 62 years old Tennessee laws provides for up to a $20,000 exemption. If both spouses are 62 or older the exemption rises to $25,000.

Tennessee law grants a $25,000 homestead exemption for an individual filing a Chapter 7 who has at least one dependent child. This exemption doubles to $50,000 when a married couple with at least one dependent child files a Chapter 7.

The amount of equity in your house is important to know when considering Chapter 7. If your exempted amount is more than your equity then there is no chance a Chapter 7 Trustee will seek to sell your house to pay creditors.

If the equity in your house is more than the amount you are entitled to exempt then you will have to pay the difference between the equity minus the exemption, or you will risk losing your house when you file a Chapter 7 bankruptcy.

If you are behind on your house payment then Chapter 7 might not be the best option. A Chapter 13 repayment plan would ensure you retain possession of your home.