A Chapter 7 bankruptcy is also known as a liquidation bankruptcy. This means that any property that a Chapter 7 filer has that is not exempt may be liquidated or confiscated and sold to pay off debts.

It is imperative that you know what property is exempt, and therefore property you can keep, and what property is not exempt before you file a Chapter 7 bankruptcy.

Each state has different exemption rules. In Tennessee a single individual can exempt $5,000 of their homestead (house) while a married couple can exempt $7,500.

For those filers over the age of 62 Tennessee allows an individual a $12,500 homestead exemption. A spouse aged 62 or older who has a spouse under 62 is allowed a $20,000 exemption. A married couple both of whom are over the age of 62 receive a $25,000 exemption.

A person who can claim one of more dependent children may exempt up to $25,000 of the value of their home. A married couple with a child or children receives a $50,000 exemption.

If you know the amount of equity you have in your home then you can determine the likelihood of a Chapter 7 Trustee trying to sell your home in a Chapter 7 bankruptcy. If your equity is less than your entitled exemption your creditors and Chapter 7 Trustee will nto be able to sell your home.

In the case where your exemption is less than your equity then you have two choices; pay the difference to the Chapter7 Trustee, or allow the Chapter 7 Trustee to sell your house.

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.