You set the table, made a great dinner, lit candles, and put on some music. Your partner comes home delighted with the effort you put forth and you both sit down for some quality time together. Just as you are about to eat, you hear a noise coming from outside. You go to the door and see that your car is being repossessed. That romantic moment’s gone.
Maybe it’s not a romantic dinner; instead it’s a family night. Or a night with close friends or just some quality time watching television on your own. Whatever the circumstance is, if you are behind on your bills and can’t catch up, a fun night quickly turns sour when creditors start pursuing you.
A Chapter 7 Bankruptcy Can Help
There are several different types of bankruptcy, divided into categories called Chapter. For individuals and families, Chapter 7 and Chapter 13 provide the most relief. A Chapter 7 bankruptcy is known as a “straight” bankruptcy where all debts and assets are liquidated and most debt is discharged.
A Chapter 13 is a debt reorganization plan. Some debt is discharged, but most debts are put into a three or five year plan that the debtor pays off to a representative of the creditors called a trustee. Typically a Chapter 13 is used when a debtor makes more than the average income for Tennesee, or if a home or other secured debt is in arrears and he/she is attempting to keep that property.
Bankruptcy can help those who feel like they are drowning in debt. A bankruptcy will stay on your credit report for approximately ten years, but it will not stop you from taking out loans or getting a credit card. It is important however, to make all future payments to creditors on time to build your credit back up.
Meet the Requirements
Before you say “Sign me up,” there are a few requirements each resident in Tennessee must meet. Congress passed the Reform Act of 2005, making it necessary for each individual filing for bankruptcy to either pass the means test or fall under the average income level for the state they reside in. In Tennesee the median income level is as follows:
- Single individual—$38,144
- Family of Two—$47,194
- Family of Three—$53,277
- Family of Four—$63,217
For additional family members Tennessee residents must add $7,500 per person to the base income level.
If you make more than the median income level for Tennessee you still may qualify through the means test. This test is a mathematical process that uses the details of your financial situation and it determines whether you will still benefit from a bankruptcy. Your bankruptcy attorney may request additional documents from you to make sure you pass the means test.
Preparing Your Bankruptcy Chapter 7 Documents
Once your attorney has qualified you for a bankruptcy, Chapter 7 or otherwise, the next step is to prepare your petition and to take the necessary debtor’s education courses. As outlined in the Reform Act, anyone planning to file bankruptcy must take a debt education course before and after they file for bankruptcy. These courses are not long, typically around 90 minutes or so, and can be taken over the phone or online. Talk to your local Tennessee bankruptcy attorney about trustworthy companies to take your course. Please note that your courses will be submitted with your petition to the Bankruptcy Court.
Your petition is a set of documents ranging approximately 45-60 pages of details about your finances that is submitted to your creditors and the Bankruptcy Court. Within these pages your exemptions are outlined for your Chapter 7 bankruptcy. Every state has its own exemption laws which allow debtors to keep a certain amount of physical and personal assets. For residents living in Tennessee these exemptions include:
- Home exemption:
- Up to $5,000 for a single individual
- Up to $7,500 if the home is jointly owned and both are filing bankruptcy
- Personal property: 100% of clothing, appliances, books, furniture, art and other home goods
- Other personal property: Including money and bank deposits up to $10,000 (this includes an automobile)
- Wages: Up to 75% of all earned wages, not including taxes
- 100% State pension money and interest for IRC-qualified retirement plans
- 75% of stock bonuses, pensions, or profit sharing contracts
- 100% interests in pension for Foreign Service employees
- 100% Medal of Honor pension (for those working in the Army, Navy, Air Force, or Coast Guard
- 100% Pension interests or profit sharing plans for CIA employees
- Benefits and Insurance:
- 100% of any accident health or disability insurance benefits
- Up to $5,000 of insurance proceeds from a destroyed home
- 100% Crop insurance
- 100% Veteran’s Administration benefits
- 100% Retirement benefits
- 100% Social Security benefits
- 100% Unemployment or public assistance benefits
- College savings plans: 100% of all prepaid savings plans for college tuition
Other exemptions may apply depending on your current financial situation. While Tennessee residents are able to file for bankruptcy without an attorney, it is highly recommended that you consult with an attorney about your financial situation before you file.
Turn your life around today. Don’t wait for creditors ruin a good time with family or friends. Filing for bankruptcy may help you get back on track with your finances allowing you to fully enjoy your life. Contact a Tennessee bankruptcy attorney today.
Tennessee Bankruptcy Courts
Historic United States Courthouse
31 East 11th Street
Chatanooga, Tennessee 37402-2722
Phone: (423) 752-5163
James H. Quillen United States Courthouse
220 West Depot Street, Suite 218
Greenville, Tennessee 37743
Phone: (423) 787-0113
Sixth Circuit Bankruptcy Appellate Panel
United States Courthouse
111 South Highland Avenue
Jackson, Tennessee 39301
Phone: (731) 421-9300
Howard H. Baker, Jr. United States Courthouse
800 Market Street, Suite 330
Knoxville, Tennessee 37902
Phone: (865) 545-4279
One Memphis Place
200 Jefferson Avenue, Room 413
Memphis, Tennessee 38103
Phone: (901) 328-3500
United States Customs House
701 Broadway, Suite 200
Nashville, Tennessee 37203
Phone: (615) 736-5584