The average Tennessean can have understandable concerns related to their home or car when they have lost their job. They may have serious concerns related to foreclosure or repossession and may have tried everything to make both mortgage payments and car payments, but have fallen behind for reasons outside of their control.
It is a common concern for individuals considering bankruptcy options to believe that bankruptcy options will cause them to lose their home, car or the other things that are important to them. That is not necessarily the case.
There are generally two types of personal bankruptcy protection, which both offer debt relief. Chapter 7 liquidation bankruptcy and Chapter 13 bankruptcy are options available to individuals who qualify. Both provide an automatic stay, preventing creditor collection actions, once a bankruptcy petition has been filed and with the ability to stop repossession.
In a Chapter 7 bankruptcy, for instance, only non-exempt assets are liquidated to repay creditors. Certain categories of property, including a home or equity in a home and a car, can be protected. Limits may apply to the categories of protected property.
Chapter 13 bankruptcy may be able to protect a home from foreclosure. This is done by stopping the process and allowing the struggling homeowner to become current or through other reorganization or modification options.
What is important for individuals struggling with debt to understand is that there are different legal options available to help and protect them. Understanding which option is best for the situation is important, so it is helpful for individuals considering bankruptcy to explore what different options may be able to do for them.