Dealing with financial problems often means making difficult decisions. Tennessee residents who choose to file for bankruptcy must cope with some very difficult elements of the legal process. Specifically, individuals who pursue financial relief through Chapter 7 bankruptcy must endure liquidation procedures. Liquidation involves selling off a person’s possessions in order to secure enough money to satisfy his or her bankruptcy creditors.
Though exemptions can protect some of a person’s possessions, individuals who choose this path must part with many personal property items. Individuals may have to give up things that they would prefer to keep; however, many people elect to part with their possessions for the opportunity to live debt-free lives.
Additionally, filing for Chapter 7 bankruptcy can negatively affect an individual’s credit. A poor credit history and credit score can be a red flag to lenders, including those who issue mortgages and can limit a person’s access to credit cards and other financial loans. Though living without access to easy credit may be a challenge, individuals who use bankruptcy to resolve their debt problems may wish to avoid credit in the wake of their bankruptcy discharges to avoid putting themselves back in financial peril.
Finally, filing for Chapter 7 bankruptcy may not allow a person to eliminate all of the financial obligations that are pushing toward financial ruin. Obligations such as spousal support and child support cannot be eliminated in bankruptcy, and student loan debts generally will not be forgiven during the process as well. Therefore, individuals should examine the sources of their financial difficulties to determine if they may be improved through the Chapter 7 bankruptcy process.
There are a number of advantages to using bankruptcy to improve one’s financial situation. However, as no two people have the same financial challenges, each individual should assess the benefits and drawbacks of pursuing Chapter 7 bankruptcy for his own life. This will ensure an individual fully understands the process, what benefits it could provide and what life after bankruptcy could look like.