How to Protect Your Assets Using Bankruptcy Exemptions

TRI Writer • May 27, 2021

When considering a bankruptcy filing, many people imagine repo companies arriving at their home to take their possessions, and sell them to the bank. They imagine being left standing empty handed. Debt free, but without their possessions. This is an exaggerated over-simplification of the bankruptcy process. The reality is that bankruptcy law includes bankruptcy exemptions designed to help protect property during bankruptcy.

What Are Chapter 7 Bankruptcy Exemptions?

Bankruptcy is intended to help people get back on their feed when they’ve lost control of their finances. To help do this, the government put a set of bankruptcy exemptions in place that allow bankruptcy filers to maintain their quality of life while resolving their debt. Any property that qualifies as “exempt” according to the bankruptcy exemptions is not included in the bankruptcy estate. Property that is not exempt becomes part of the bankruptcy estate. The bankruptcy trustee can sell it and divide the profit among the filer’s unsecured creditors.

Protecting Property with Bankruptcy Exemptions:

Most Chapter 7 bankruptcy exemptions have a limit, so anyone filing bankruptcy can protect certain types of property up to a capped amount. If the asset a debtor hopes to protect is valued at an amount above the stated exemption max, the asset would become part of the estate. When the bankruptcy trustee sells the asset, the exempt amount of the proceeds from the asset are returned to the debtor, and the remaining amount (above the exempt max) is divided amongst creditors.

Federal or State Bankruptcy Exemptions: Which Set Applies?

Some states allow bankruptcy filers to choose whether they want to use federal bankruptcy exemptions or state bankruptcy exemptions. However, Tennessee and Georgia do not offer this option. When filing bankruptcy in Tennessee or Georgia, bankruptcy exemptions are determined by state law, not the federal bankruptcy exemptions. (One exception is that Georgia and Tennessee filers can use the federal nonbankruptcy exemptions to protect specific disability benefits and retirement accounts). If you are filing bankruptcy in Tennessee or Georgia, make sure to discuss state exemptions and how they apply to your estate with an experienced local bankruptcy attorney.

How to Determine Which State Exemptions Apply:

The state you file bankruptcy in is typically determined by the state you have resided in for the past two years before the filing. If the state of residence was not constant for the two year period preceding bankruptcy, the place of “residence” of the bankruptcy filer may revert to the previous state of residence. Discuss the situation with a bankruptcy specialist to ensure you base your expectations for the bankruptcy on the correct state’s bankruptcy exemptions.

If you need to file Chapter 7 bankruptcy and are worried that you don’t understand how to maximize your bankruptcy exemptions , discuss your options with an experienced bankruptcy attorney. Don’t hesitate to call Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.

Can I Keep My Car If I File for Chapter 7 Bankruptcy in Tennessee?

February 17, 2025
Can I Keep My Car If I File for Chapter 7 Bankruptcy in Tennessee?

What Are My Options If I Am Drowning in Credit Card Debt in Tennessee?

February 1, 2025
What Are My Options If I Am Drowning in Credit Card Debt in Tennessee?

What Are the Documents Required to Apply for Chapter 7 Bankruptcy in Tennessee?

November 21, 2024
What Are the Documents Required to Apply for Chapter 7 Bankruptcy in Tennessee?

What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy in Tennessee?

October 29, 2024
What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy in Tennessee?

Understanding Chapter 7 Bankruptcy Qualifications

June 24, 2024
Understanding Chapter 7 Bankruptcy Qualifications

Understanding the Role of the Trustee in Chapter 13 Bankruptcy

April 5, 2024
Understanding the Role of the Trustee in Chapter 13 Bankruptcy

Understanding which Debts can be Discharged in Chapter 7 Bankruptcy

March 27, 2024
Understanding which Debts can be Discharged in Chapter 7 Bankruptcy

Protecting Your Assets in Chapter 7 Bankruptcy

February 19, 2024
Protecting Your Assets in Chapter 7 Bankruptcy

Subchapter 5 Bankruptcy: Unlocking New Possibilities for Tennessee Residents

January 30, 2024
Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses?  In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.

A Comprehensive Guide to How Chapter 11 Bankruptcy Works in Minnesota

December 21, 2023
Filing for bankruptcy can be a scary and confusing decision, but it is a necessary step for individuals and businesses who are struggling with their finances. In Minnesota, one of the most common types of bankruptcy is Chapter 11 bankruptcy, which allows a business to reorganize its debts and continue operating while paying off its creditors. If you're considering Chapter 11 bankruptcy, it's important to understand how it works and what benefits it can offer. In this post, we'll delve into the process of filing for Chapter 11 bankruptcy, highlight its advantages, and discuss how you can get started.  1. Understanding Chapter 11 Bankruptcy Chapter 11 bankruptcy is a form of bankruptcy that allows businesses to reorganize their debts while continuing to operate. The goal of this process is to give businesses a chance to become profitable again by restructuring their debt payments. During Chapter 11 bankruptcy, a business is protected from creditors by an automatic stay that prevents them from pursuing collection activities. The debtor then works with a bankruptcy court and creditors to create a repayment plan that will allow them to pay off their debts over time. 2. Benefits of Chapter 11 Bankruptcy There are several benefits to filing for Chapter 11 bankruptcy. One of the primary benefits is that it allows the debtor to maintain control of their business operations while repaying their debts. This means that the debtor can continue to generate revenue and will not be forced to liquidate their assets to pay off their creditors. Additionally, Chapter 11 bankruptcy can give the debtor more time to negotiate with their creditors and reach a repayment agreement that is more favorable to them. 3. How to File for Chapter 11 Bankruptcy Filing for Chapter 11 bankruptcy can be a complex and time-consuming process, but it is possible with the help of a knowledgeable bankruptcy attorney. The first step is to file a petition with the bankruptcy court, which will initiate the automatic stay and prevent creditors from taking any further collection actions. Next, the debtor will need to provide the court with a comprehensive list of their assets, liabilities, and creditors. From there, the debtor will work with their attorney to create a repayment plan that is feasible and fair to all parties involved. 4. Working with a Bankruptcy Attorney Filing for Chapter 11 bankruptcy can be an overwhelming process, and it is important to work with a qualified bankruptcy attorney who can guide you through the process. A bankruptcy attorney can help you prepare and file the necessary paperwork, negotiate with creditors on your behalf, and create a repayment plan that is tailored to your unique financial situation. Additionally, an attorney can give you advice on how to protect your assets and maintain control of your business operations during the bankruptcy process. Filing for Chapter 11 bankruptcy can be a complicated and stressful process, but it can also be a valuable tool for businesses that are struggling with their finances. By reorganizing their debts and negotiating with creditors, businesses can get a fresh start and work towards profitability once again. If you're considering filing for Chapter 11 bankruptcy in Minnesota, it's important to work with a qualified attorney who can guide you through the process and help you achieve the best outcome.
More Posts
Share by: