What is a Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy involves the complete liquidation of your assets as an individual with the sole exception of a limited amount of exemptions offered within the state.
If any assets are remaining after the exemptions have been put through, then they will be sold by the state’s trustee and the profits distributed to your creditors.
Who is Eligible?
Not everyone can file a Chapter 7. In Tennessee, you’ll find that you have to pass a “means test” which will determine if you are eligible or not. If your income is in excess of a certain amount, then you won’t be able to file for this type.
It’s available to the following:
- Married Couples
So if the entity which is seaking to file a Chapter 7 falls under a different type of arrangement, then they’ll have to seek out other options.
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What Debts Can Be Cleared?
Most of your debts can be cleared when filing for a Chapter 7 bankruptcy, but not all types of debt are able to be discharged in this manner. Those which cannot be removed include the following:
- Child Support Payments
- Some Taxes
- Student Loans
In most cases when an individual is filing for a Chapter 7 they’ll have a large amount of debt on a credit card and few assets which can be taken.
Secured debts such as furniture, cars, and homes can be reaffirmed by signing the appropriate paperwork in order to keep the property. If you decide that this is the route you want to take, those debts cannot be discharged for another eight years.
You must also bring any reaffirmed debts back to current. For instance, if you are two months behind on your home’s payment then you’ll have to pay those two months in order to keep the home and continue to pay on it.
You may selectively reaffirm your debts, so you can let some things go and keep others. For instance, you might allow the jewelry and furniture to go back to your creditors but want to keep your home and car.
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Filing for Chapter 7 Bankruptcy
Any kind of bankruptcy is a complicated process, and you’ll find that you want the help of a legal professional on your side during the proceedings. The whole process requires itemizing your exemptions, the filing itself, and numerous intricate pieces of work.
It will be an intense three to four months, but having an attorney who can explain things to you and help you make the right decisions for the future of your financial welfare is essential.
We have offices located in Johnson City, Knoxville, Kingsport, Chattanooga, and Morristown, TN and want to help you through this difficult period of your life. Contact us, and we can help you to decide how to move forward with the proceedings, and you can have confidence that your steps will be guided in the right direction.