Unmanageable debt can have extremely adverse effects on an individual’s health, family, and financial position. This event can lead individuals, families, or business owners to pursue bankruptcy as a solution. But before filing, you have to ensure that the specific type of bankruptcy makes financial sense to you.
Chapter 7 bankruptcy is considered “straight bankruptcy” with no repayment plans, as seen in Chapter 13 bankruptcy. The continue to help families undergo financial relief through bankruptcy, especially after a job loss, divorce, or medical emergency. Chapter 7 bankruptcy will likely erase your debt, rebuild your credit and stop the constant calls from collection agents.
What Type of Debts Are Discharged in Chapter 7?
Chapter 7 bankruptcy in Tennessee allows any non-exempt assets to be turned over to a . The property will be sold and distributed equally among your unsecured creditors. But very few people turn over property to a trustee.
Once the non-exempt property is surrendered, a debtor qualifies for a discharge (debt forgiveness) of unsecured debts. Many people can erase the following debts through Chapter 7 bankruptcy:
- Medical bills
- Personal loans
- Civil court judgments
- Credit card debt
- Lease and contract debts
- Utility balances
Immediately you file for Chapter 7 bankruptcy, the Tennessee bankruptcy court will issue an automatic stay order which stops any creditors or collection agencies from calling and harassing you.
Will I Lose Everything After Filing for Chapter 7 Bankruptcy?
The answer is NO. While a trustee will require you to sell assets to pay off debt before discharging the rest of it, you can often keep much of your personal and real property. There are statutory exemptions that allow you to keep property under an exemption.
What Type of Assets Can I Keep in Chapter 7?
You will keep certain assets that will help you rebuild your life following bankruptcy. They include:
- Motor vehicles
- 401(k) accounts and retirement accounts
- Welfare and unemployment benefits, health aids, scholarships, pensions
- Burial plots
- Tools of the trade
- Alimony and child support
- Checking and savings accounts
- Household goods and furniture
Is Chapter 7 Right for Me?
If you wish to know whether Chapter 7 bankruptcy is ideal for you, you need to ask yourself these questions:
- Will Chapter 7 discharge enough debt to make a difference?
- Will I have to surrender property I want to keep?
- Am I judgment proof – are creditors already barred from taking my property and income even before filing for Chapter 7 bankruptcy?
While Chapter 7 bankruptcy has helped many people, it sometimes isn’t the right option. Your can look at your case’s details and advise you best. Here are good signs that Chapter 7 may be right for you:
- Your debt has seriously disrupted your life
- Your debts are more than half your total annual income
- Your monthly family income doesn’t exceed the median income in Tennessee
- You would probably take at least five years to clear your debts
- You have little or no disposable income
What Are the Advantages of Chapter 7 Bankruptcy?
Most people prefer this Chapter to get quickly get out of debt. Here are some of its benefits:
A quick process – once you file for Chapter 7 bankruptcy in Tennessee, it will typically take about 3-6 months to complete.
Many debts are erased – not all, but many debts will be wiped out and leave the person with particular debts like recent taxes, student loans, and unpaid child support.
No payment plan – the filer emerges debt-free and isn’t bound by a payment plan, as is the case of Chapter 13 bankruptcy which can have a three to five repayment plan.
You keep your car or home in some situations – as long as you are current on payment and can continue making payments even after your bankruptcy case, you can keep your home or car.
Protection of property – while you may lose property in Chapter 7, you still get to keep most of your necessities.
What Are the Disadvantages of Chapter 7 Bankruptcy?
Certain non-dischargeable loans are not erased, e.g., student loans, domestic support obligations, and income tax debt. Similarly, those who are high-income earners in Tennessee fail to qualify for Chapter 7.
Those who will end up losing significant equity in property or are facing repossession or foreclosure won’t find Chapter 7 suitable for them. An experienced Kingston bankruptcy lawyer will tell you that Chapter 13 would be the next ideal option in such situations.
How Much Does It Cost to File Chapter 7 in Tennessee?
At Davis Law Firm, we have included everything in the attorney fees to cover everything needed to file your case:
- Court filing fee for your bankruptcy case
- Mandatory credit counseling course fee
- Credit report
- Core attorney services
We may offer discounts and flexible payment terms on a case-by-case basis. to discuss your payment options as you seek a fresh start.
Will I Be Able to Access Loans After Filing Bankruptcy?
A Chapter 7 bankruptcy will remain on your credit report for about seven to 10 years. However, you can start rebuilding your credit in three months after filing for bankruptcy.
Most debtors who opt for Chapter 7 and have regular income can often finance vehicles in as few as four months and a home in three to five years, depending on how they maintain their credit.
Compassionate Attorney Helping Tennesseans Have Peace of Mind
When determining which type of bankruptcy Chapter is right for you, you need certified and experienced attorneys to help you choose the best option. Every situation is different, and no two sets of finances are the same.
A skilled bankruptcy attorney with offices in Kingston and Crossville and serving throughout Tennessee can help you strategize your best course of action. At Davis Law Firm, we are knowledgeable about all things bankruptcy, finances, and both federal and Tennessee laws on bankruptcy. Call us at 865-354-3333 or 931-248-7100 for a 100% free consultation.