Filing for bankruptcy is a difficult choice for anyone. To add to that, the different types of bankruptcy and different bankruptcy laws often make the process of filing for bankruptcy in Knoxville confusing and frustrating. That is far from ideal during one of the most difficult times of a person’s life.
Anyone can file bankruptcy online themselves. The problem is knowing what you are doing. Which is the best type of bankruptcy to choose for you situation and how to avoid mistakes.
Chapter 7 bankruptcy is a legal process where individuals with limited income who are heavily in debt are able to liquidate (which just means “sell”) a large portion of their assets in order to pay off their creditors and absolve them of all their applicable debts. This plan is often referred to as a “fresh start” because Chapter 7 bankruptcy allows many filers to completely leave past debts behind after their case is discharged.
The federal government has established a “means test” to determine if someone qualifies for Chapter 7 bankruptcy, and Chapter 7 bankruptcy eligibility largely depends on an individual’s income relative to the state’s average.
The latest numbers for median income in Tennessee from the U.S. Census show the average is $53,320 for a household and $29,859 for individuals. There are a few other restrictions, including that the filer must have lived in the state for at least 90 days and take a credit counseling class in Tennessee at least six months prior to filing for bankruptcy.
Chapter 7 bankruptcy is the most common type of bankruptcy in the United States. However, our Knoxville bankruptcy lawyers handle about the same number of Chapter 7 bankruptcies as we do Chapter 13 bankruptcies, as there are a relatively even proportion of Chapter 7 bankruptcies compared to Chapter 13 bankruptcies in the state of Tennessee.
Overall, bankruptcy is far more common in both Tennessee and the United States than you may think. According to the American Bankruptcy Institution, there have been more than 420,000 Bankruptcies in Tennessee since 2010, and over 99 percent of those are either Chapter 7 or Chapter 13 bankruptcies. That means there has been about one bankruptcy filed for every 15 people living in Tennessee during that time. We’ve helped hundreds of clients file Chapter 7 bankruptcy in Knoxville, and we’re ready to help you next.
Soon after you have filed for Chapter 7 Bankruptcy, you will have a meeting between yourself, the trustee appointed to your case, and the creditors to which you owe money. Many clients may get worked up over this meeting, but there is no need to worry.
This meeting will allow you to prove your identity and financial situation to those at the meeting, along with discussing your plan for which debts you will or will not be able to repay. Our bankruptcy lawyer will have you prepared for what questions you may receive in this meeting from the trustee or creditors in attendance.
As we noted in the question above, while Chapter 7 bankruptcy is most common in the United States, Chapter 13 bankruptcy in Tennessee is as common – and in some years more common – as Chapter 7.
Chapter 7 is the quicker form of filing for bankruptcy, and there are no payment plans to worry about like there are in Chapter 13 bankruptcy. In some cases, you can even keep your property and manage to keep your credit score out of the gutter. But there are also negatives, such as that Tennessee does not exempt your car or vehicle from being sold to creditors, making it more difficult to keep in your possession.
Filing for bankruptcy is a complex decision, and our local bankruptcy attorney is here to make the best choice for you and your individual case.
Although the Bankruptcy Code is a Federal law, each state has different laws that protect property for the residence of their state. Also, each district in each state has its own local court rules. For instance, the Federal Homestead Law allows citizens of the United States to protect up to $250,000 of equity in a home, but most states, including Tennessee, have opted out of the Federal Exemption Laws. This means an experienced bankruptcy attorney must identify whether you must claim Tennessee exemption laws, Federal laws, or another State’s laws.
In Tennessee you are allowed to protect $35,000 of equity in your home for individual owners and $52,500 of equity for a married couple filing for bankruptcy.”
Tennessee also allows their residents a personal property exemption so that an individual filing for bankruptcy can protect $10,000 of personal property such as equity in a vehicle, household goods, furniture, money can funds in a checking or savings account. A married couple filing for bankruptcy can protect $20,000 of personal property.
Tennessee also has unique fraudulent conveyance laws that are longer than the federal fraudulent transfer laws in the Bankruptcy Code. A Trustee in bankruptcy can seek to avoid a fraudulent conveyance using both the Tennessee state law or the Federal law.
One of the advantages to filing for Chapter 7 bankruptcy in Tennessee is that your bankruptcy case can be settled in less than a year, whereas Chapter 13 bankruptcy cases generally take at least three years.
Bankruptcy is a complex, convoluted process that can wear anyone down. Our clients often explain to us that they were reluctant to hire a bankruptcy attorney due to fear of fees and falling further in debt, only to find out that our experienced bankruptcy attorneys at Cindy Lawson & Associates P.C. helped them keep more of their money and more of their property than they expected if they had filed by themselves.
Howard H. Baker U.S. Courthouse
800 Market Street
Knoxville, TN 37902