Many Tennessee residents are currently struggling financially to stay afloat. Like many other people throughout the country, some of those facing financial crisis in this state are business owners. Others are navigating divorce and learning that the financial implications of their circumstances may present more of an economic challenge than they first realized. When finances get out of hand and immediate debt relief is needed, many individuals use Chapter 13 bankruptcy as a valuable economic tool to help them restore financial stability.
A trustee oversees a Chapter 13 plan
There are several types of bankruptcy. Chapter 13 is classified as a program that is specifically for individuals who are facing a personal financial crisis. With this particular type of bankruptcy, a trustee is appointed to review a proposed repayment plan and to make recommendations to the court. A trustee also oversees the agreed-upon payment plan. An individual must have reliable, disposable income available to qualify for Chapter 13 bankruptcy.
Options for retaining home ownership
This debt relief program differs from other types of bankruptcy in several ways. One thing that sets it apart is that there is a time period allotted for distribution of payments among creditors. A Chapter 13 applicant typically has three to five years to relinquish all disposable income to the trustee, who then distributes it to the creditors. Chapter 13 bankruptcy is often used to help avoid home foreclosure, whereas this may not be possible with another type of bankruptcy, such as Chapter 7.
Determine which type of bankruptcy best fits specific needs
Chapter 7 bankruptcy also typically includes a complete liquidation of assets. An individual who wants to avoid this may opt for Chapter 13 instead. Because bankruptcy issues can be complex, it is helpful to consult with someone well-versed in U.S. bankruptcy laws to obtain support in determining which type of bankruptcy would be a most viable option in a specific set of circumstances.