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Cleveland Tennessee Bankruptcy Law Blog

Bankruptcy options provide protection when behind on bills

Because debt and debt-related stress can be a significant burden, taking care of debt can be a significant life step for anyone who has been struggling with overwhelming debt for some time. Especially for those facing medical bills, or may be facing other everyday financial struggles that have gotten out of hand and have resulted in the use of credit cards, understanding how they might enjoy debt relief can be significant.

There are different types of options available to struggling consumers to help them manage their debt and potentially be debt free. Personal bankruptcy protections can help the filing party with their debt-related concerns. There are two primary types of personal bankruptcy and how struggling consumers can qualify for each has been recently been discussed on this blog. The two types of personal bankruptcy protection are Chapter 7 bankruptcy and Chapter 13 bankruptcy.

How do I qualify for Chapter 13 bankruptcy?

This blog recently discussed how someone considering debt relief options may qualify for Chapter 7 bankruptcy. Another personal bankruptcy option is chapter 13 bankruptcy and it is important to know how to qualify for Chapter 13 bankruptcy as well.

Chapter 13 bankruptcy is different than the Chapter 7 liquidation bankruptcy option in that it allows the filing party to keep their property and repay creditors according to a repayment plan worked out with the bankruptcy court. The repayment plan will usually last 3 to 5 years and if the filing party abides by the plan fully, they will usually be able to discharge any debts not addressed by the plan and enjoy a fresh financial start.

How do I qualify for Chapter 7 bankruptcy?

If you are seeking debt relief, understanding how to qualify for personal bankruptcy protection is an important step in understanding your options. One type of personal bankruptcy is Chapter 7 bankruptcy. In general, there is a means test that is used to determine who is eligible to file for Chapter 7 bankruptcy.

The Chapter 7 bankruptcy means tests looks at the filing party's average monthly income for six months prior to filing for bankruptcy and compares it to the state's median family income. If the filing party's income is higher than the state's median family income, they may not be eligible to file for Chapter 7 bankruptcy. Conversely, of course, if their income is lower than or equal to the state's median family income, they may qualify to file for Chapter 7 bankruptcy protection.

Tennessee remains in top 3 in the nation for bankruptcies

Though bankruptcy filings may be decreasing nationally, Tennessee remains among the top 3 states in the nation for bankruptcy filings. Bankruptcy filings in a neighboring Tennessee city just southwest of the Cleveland area were up somewhat in the first half of 2018 which brings them up to their highest level in five years for the first six months of the year. Bankruptcy filings have increased slightly each year since 2014 as the economy has improved and population numbers and borrowing has increased.

In Tennessee, the number of individuals and businesses filing for bankruptcy protection is almost double the national per capita rate. Bankruptcy protections are in place to help struggling consumers, and businesses, enjoy debt relief and a fresh financial start as they move forward. There are different types of bankruptcy protections that are available depending on the situation and circumstances.

Bankruptcy options can help protect a family home or car

When dealing with overwhelming debt on a daily basis, concerns about a family home or car to get to and from work can be exceptionally stressful. For individuals faced with that situation, it is important to be familiar with bankruptcy protections options and how they can help them enjoy debt relief and, in some instances, can also protect a family home or car.

Falling behind on home or car payments can happen because of job loss or for other understandable reason. Personal bankruptcy options may provide individuals in that situation with a fresh financial start, while at the same time allowing for protection of a family home or car. Different personal bankruptcy options can provide different protections but all can provide help with overwhelming debt. To begin with, filing for bankruptcy protection creates an automatic stay from the bankruptcy court so creditors must halt debt collection activities during that time.

Most common lies debt collectors try to tell

People with immense debt can expect debt collectors to call them on a regular basis. However, it is important to know that even though you have debts, you still have rights these collectors must respect, such as the right to obtain written verification of your debts. 

Sometimes collectors can be quite persistent, but there are actions they cannot take by law. For starters, a debt collector may say a company will garnish your wages if you do not pay within a given timeframe. There is a legal process a debt collection agency must follow, and that includes sending you a written confirmation of the court date when you will have a chance to dispute the debt. Here are other common lies to watch out for: 

Help with debt through Chapter 13 bankruptcy protection

Chapter 13 bankruptcy is one option that can help with debt and struggles associated with too many bills and the stress that comes along with overwhelming debt. Chapter 13 bankruptcy is a reorganization bankruptcy option that allows the struggling consumer to reorganize their debts and repay them over a period of time.

Chapter 13 bankruptcy is an option available to a filing party that has a reliable source of income so they can repay debts according to the repayment plan worked out with the bankruptcy court. Debts that aren't repaid but were addressed by the repayment plan can be discharged. The filing party typically has 3 to 5 years to repay debts according to the repayment plan worked out with the bankruptcy court.

When can creditors lodge an objection to a bankruptcy discharge?

Whether it is a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, Tennessee debtors who are moving forward with the process should be aware of certain issues that could arise. One issue is the discharge and whether creditors can lodge an objection to it before it is granted. Understanding when creditors might object is critical to a filing.

With a Chapter 7 bankruptcy, there is no automatic discharge. The creditor, trustee on the individual case, or a U.S. trustee can object. There is a deadline for which creditors have to file an objection. If there is an objection, the creditor must file a complaint prior to the deadline. After the objection, an adversary proceeding will begin. Reasons for a discharge to be denied include not providing tax information, not completing a financial management course, transferring or concealing property to damage the creditors, destroying records, committing perjury, not accounting for lost assets, or violating a court order related to an earlier case.

Understanding Chapter 7 bankruptcy exemptions

Bankruptcy exemptions are an important part of the Chapter 7 bankruptcy process. Because they provide protections for the filing party, bankruptcy exemptions are essential to understand. In general, Chapter 7 bankruptcy protection allows the filing party to liquidate non-exempt assets to repay creditors which is why it is important to understand which property is exempt from that process.

Property that is generally exempt from the Chapter 7 bankruptcy process includes vehicles up to a certain value; a home up to a certain value; pensions; household appliances; reasonably necessary household goods and furnishings; reasonably necessary clothing; jewelry up to a certain value; tools of the filing party's trade up to a certain value; a portion of unpaid but earned wages; public benefits; and a personal injury settlement or award.

Protections for a family home through bankruptcy

One of the biggest concerns homeowners who are considering bankruptcy may have is the security of their home in the process. When a party is considering bankruptcy, they are likely facing overwhelming debt and have many concerns related to their financial situation and financial future. In some instances, but not all, the party filing for bankruptcy is able to keep their home but they should be familiar with how that may be possible.

The bankruptcy process is designed to help struggling homeowners and consumers repay their debts but it is not designed to make them start from scratch. There are two primary types of personal bankruptcy including Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy is a liquidation bankruptcy options that allows the filing party to liquidate non-exempt assets to repay debts. Homestead exemptions at both the federal and state levels help to protect some of the value of a home. Chapter 13 bankruptcy, on the other hand, allows the filing party to reorganize and repay their debts.