Debts that are reaffirmed
If the person filing for bankruptcy wishes to keep certain properties, such as automobiles, he or she may have to create a reaffirmation agreement with the appropriate creditor. This written agreement states that the debtor is still liable to pay back the loan, and the creditor will not repossess the property. In most cases, this reaffirmation has to be created and filed before the discharge papers are entered. This helps ensure that the desired properties are not taken away to fulfill a debt.
Before this type of agreement can be made, the person filing for bankruptcy must be advised on what it means to keep the debt. The courts may require proof that keeping the property will not cause unnecessary hardships for the debtor or his or her family before the reaffirmation can be approved.
Assets with no equity
The whole point of selling off property is to gain money to use to pay back creditors. If a person owns a vehicle that has no equity in it, that vehicle likely will not be sold to pay the creditor back. However, if the car has a lien on it, the lienholder may be able to repossess the vehicle. Similarly, most trustees will not bother selling items that have little to no monetary value. Instead, they are looking for big-ticket items that can make a significant impact on the debt.
Belongings needed for business
If the person filing for Chapter 7 bankruptcy runs a business, the equipment used for the operations of the company may be exempt from liquidation. This could include musical instruments, computers, inventory or art supplies. The exact items included in this exemption depend on the type of business the person runs.
Properties used for residence
In most cases, a house that serves as a primary home will be exempt from the liquidation required by a Chapter 7 bankruptcy. If the person has more than one house, the secondary properties may still be sold to pay off creditors. In some cases, a person may need to prove which house is his or her primary residence before the discharge of assets can begin.
In Tennessee, a person filing for a Chapter 7 bankruptcy may be able keep some of his or her assets. No matter which chapter of bankruptcy a person is filing for, it may be helpful to work with a knowledgeable attorney.