• If you're planning to file bankruptcy in Tennessee, you're probably looking for answers to your financial problems. But with those answers comes a number of potential questions from bankruptcy filers, especially considering income guidelines, potential seizure of assets and which debts cannot be discharged through bankruptcy.
  
  

Income

• Some people can't file for Chapter 7 debt liquidation because they earn too much money, according to the book "How to File for Chapter 7 Bankruptcy." Tennessee residents hoping to declare Chapter 7 must find out if they make less than the annual median income level for their household size. As of 2010, a single person living in the state could earn up to $37,732 annually while a family of four could bring in up to $64,228 each year (see Resources). Debtors who earn more than these figures might still qualify for Chapter 7, but must prove through a federal means testing formula that they can't even partially repay creditors. People who are ineligible for Chapter 7 must either ask for a partial debt repayment plan under Chapter 13 or not file bankruptcy at all.
  
  

Assets

• Tennessee allows a number of asset exemptions under state bankruptcy laws, according to BankruptcyAction.com. Someone declaring bankruptcy can keep $5,000 of real estate equity under state homestead exemption laws; the guidelines also enable debtors to keep $4,000 of cash and banking accounts, up to $1,900 for tools and trade equipment and most types of personal property including family heirlooms. Federal bankruptcy laws keep all retirement accounts safe from seizure during the bankruptcy process. Tennessee bankruptcy trustees can sell excessive assets and use the proceeds to offset creditor losses, warns the book "How to File for Chapter 7 Bankruptcy." But Chapter 13 filers are much less likely to forfeit assets exceeding state guidelines since they are partially repaying their debts.
  
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Ineligible Debts

• A common question asked of Tennessee debtors is whether or not all debts are eligible for relief, notes the book "How to File for Chapter 7 Bankruptcy." Some debts cannot be reduced or eliminated even in the most dire financial situations. Those include child support, alimony, court fines, civil damages relating to committed crimes and bills incurred right before bankruptcy. Tennessee state, local and federal tax bills are only eligible for bankruptcy if they were incurred more than three years before a bankruptcy filing. In almost all cases except those relating to serious disability or a college's closure, federal student loans cannot be discharged in bankruptcy.