Many consumers in Tennessee and throughout the country find themselves overwhelmed by their mounting financial obligations. Whether it is due to credit card usage, predatory payday or auto title loans, medical bills, or an unexpected job loss, some people may wonder what forms of debt relief might be available.
One potential avenue might be filing for Chapter 7 bankruptcy, but not everyone can qualify. At the outset, potential filers must first pass the means test. This is a comparison of the monthly income of the filer (and where applicable, the filer’s other family members) to the median income in the state where the debtor resides. If the filer’s income exceeds that median, Chapter 7 is generally unavailable.
There are several other requirements that a potential filer must meet. To begin with, the debtor must take a credit counseling course from an agency that has been approved by the government. This is not a prerequisite to filing the petition, but the course must be completed within 180 days prior to the bankruptcy discharge date. People cannot file for Chapter 7 if they have had a discharge under that chapter within the previous eight years or if they have received a Chapter 13 discharge within the previous six years. There are a few other instances where a filing will not be permitted, including fraud or a violation of a court order.
While a Chapter 7 bankruptcy will stay on a debtor’s credit report for several years, there are several positive effects. Filing will put at least a temporary hold on creditor contact, and most unsecured debt balances will be discharged within a few months. An experienced bankruptcy attorney might be able to provide more information about the process, including what assets might be exempt from liquidation by the trustee.