How Does Bankruptcy Work in Tennessee?

Bankruptcy is a way for individuals to eliminate – or greatly reduce – their debts. It is a legal process with many steps and complexities. The first step, when contemplating bankruptcy, is to determine whether you qualify for Chapter 7 or would benefit from Chapter 13.

Chapter 7 or Chapter 13?

Chapter 7 is a more efficient path to debt relief. It is often the best path for people who do not earn a high wage or are not homeowners. If you have more assets than you can protect under Chapter 7, Chapter 13 may be a better option. The way to determine which chapter to use is through the means test.

The means test uses a formula that compares your average monthly expenses to your average monthly income to determine your disposable income. If you qualify under the means test, it is likely that you will file under Chapter 7. However, your attorney will be able to explain the benefits and drawbacks of Chapter 7 and Chapter 13 and help you select the path that is right for you.

The Chapter 7 process:

Complete credit counseling – Before filing for Chapter 7 bankruptcy, you must complete a credit counseling course. Your lawyer can help you register for this class.

File a bankruptcy petition – Your lawyer will put together all of the paperwork – your petition – and file it.

The automatic stay arises – As soon as your petition has been filed, the automatic stay arises that prevents creditors from contacting you or taking action against you – such as garnishing your wages.

A bankruptcy trustee is assigned – The court will assign a trustee to oversee your case. The trustee will examine your paperwork and your case to ensure there is no fraud.

A meeting of the creditors is held – Your trustee will set a meeting where you will be asked questions about your bankruptcy. This is also an opportunity for your creditors to appear, although this rarely happens.

Complete a financial management course – Before your debts can be discharged you must complete a debtor education course. Your attorney will provide you with this information.

Your exempt property is protected, your debts are discharged – If your Chapter 7 case is approved, all of your unsecured debts will be discharged and your exempt properties will be protected. If you have secured properties – such as a home with a mortgage or a car with a loan – and want to keep those properties you have options, such as reaffirming those loans or paying the loans off.

Your case is closed – Once the debt discharge is complete, your case will be closed.

The Chapter 13 process:

The first steps of a Chapter 13 bankruptcy mimic the Chapter 7 process. You must complete a credit counseling course and file your petition, the automatic stay arises and there is a meeting of the creditors. However, this is where the process begins to differ.

The repayment plan – Either with your petition, or within 14 days of its filing, you must submit a proposed repayment plan. The repayment plan must set out fixed payments to be made to the trustee on a regular schedule. All priority debts must be paid in full under the plan. Secured debts must be paid if you want to keep the underlying property (such as your home or car). Unsecured debts do not have to be paid in full.

Payments begin – Repayment plans typically last three to five years. You must make all payments laid out in the plan. If you fail to make all the payments in full, and in a timely manner, your case can be dismissed.

Your remaining debts are discharged – At the end of the repayment plan, all remaining debts will be discharged and your case will be closed (after you complete a financial management course).

Filing for bankruptcy is a big step. It is important to consult with a lawyer who will take the time to explain your options and the legal process to you.

Tennessee Bankruptcy Process

One of the issues that can create hesitancy and prevent people from taking advantage of the help that bankruptcy can provide is not knowing how the process works. People often have many misconceptions. Gaining even a basic understanding of the process can help people feel more comfortable taking the first steps toward securing the debt relief that they deserve.

Meeting With Your Lawyer

To make the most use of your meeting with a bankruptcy attorney, you should prepare. This generally means gathering relevant information such as financial information, mortgage paperwork, deeds, letters from creditors and any other information you feel will be helpful to determine what is the best path to securing relief from difficult debt.

Once all necessary information has been gathered and a path forward has been chosen, we can draft your petition for bankruptcy and file it with the court. One of the immediate benefits that everyone appreciates is the automatic stay. The automatic stay puts an immediate halt to all collection activities including wage garnishments, repossession and foreclosure.

Meeting of Creditors

Approximately 45 days after filing, there will be a meeting of creditors. At that meeting, creditors meet with the trustee to review the petition for accuracy. In a Chapter 7 bankruptcy, this is the end of the process. In a Chapter 13 bankruptcy, we will propose a repayment plan. That proposal will deal with issues such as the duration and monthly payment of the repayment plan. The plan generally lasts for three to five years.

Discharge

Once all of the steps have been worked through, the final stage is discharge from bankruptcy. Once you have been discharged from bankruptcy, it is often possible to begin rebuilding your credit right away. Many creditors find people who have recently been discharged from bankruptcy as very attractive candidates for credit.

More Than A Decade Of Bankruptcy Experience In Middle Tennessee

At Kerney Law Firm, we offer people the help they need to get a fresh start. Step one of that process is making the bankruptcy process more understandable. We work to ensure that all our clients have a clear understanding of what will happen when and how those steps help them.

Personal Bankruptcy Attorney Serving Gallatin, Nashville And The Surrounding Areas

For representation that is there with you at every step of the process, turn to our bankruptcy attorney, Christopher Kerney. To schedule a free initial consultation at our office in Gallatin or online, call 615-206-9900 or contact us via email.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.