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I'm unsure what you mean by the creditor being dismissed. If the debt was discharged, a bankruptcy discharge releases the debtor from liability for the debt. A homestead exemption in Tennessee typically extends only to that amount of equity in the property held by the claimant which does not exceed $550,000 in value. It also does not extend to payment of obligations contracted for the purchase of the property, or for improvements made thereon, including any mechanic’s lien lawfully obtained, or for legal taxes, or for:
(a) Any mortgage or deed of trust thereon executed and given, including, without limitation, any second or subsequent mortgage, mortgage obtained through refinancing, line of credit taken against the property and a home equity loan; or
(b) Any lien to which prior consent has been given through the acceptance of property subject to any recorded declaration of restrictions, deed restriction, restrictive covenant or equitable servitude, specifically including any lien in favor of an association pursuant to NRS 116.3116 or 117.070,
Also, the homestead exemption doesn't apply to Medicaid debts.