Richard Banks & Associates, P.C.

Can you file bankruptcy if you own a small business that closed?

2026-07-17T15:21:18Z

Closing your small business may have felt like the end of a difficult chapter. But if the business credit card bill or loan payment still arrives each month, is the financial burden really over? Personal bankruptcy may still be available if those payments now compete with your mortgage and household expenses. Whether business debt can be included in your bankruptcy will depend in part on whether you remain legally responsible for it.

Which business debts could remain?

Even after your business closes, some debts may remain connected to you instead of the business itself. Whether that happens can depend on your business structure and the agreements you signed. The following types of debt commonly raise questions about personal responsibility:

Personally guaranteed loans: You may remain responsible if you agreed to repay the loan when the business could not.
Sole proprietorship debts: These generally belong to you because the law does not treat the business as a separate legal entity.
Business credit cards: Your responsibility can depend on the account agreement and who agreed to repay the balance.
Certain tax debts: Bankruptcy rules treat some tax obligations differently from other debts.
Separate business entity debts: These do not automatically become your personal obligations simply because you owned the company.

Loan agreements, account contracts and personal guarantees can help establish who owes each debt. Knowing which obligations are legally yours can make it easier to understand how bankruptcy may apply to your situation.

Which type of bankruptcy could apply?

Once you know which debts you remain responsible for, the next question is which type of bankruptcy may apply. Chapter 7 may discharge many qualifying debts, subject to income rules and other requirements. Chapter 13 allows eligible individuals with regular income to repay certain debts through a plan that generally lasts three to five years. If you returned to steady work after closing your business, Chapter 13 may be an option if old business debt continues to compete with your mortgage and household expenses. Your income, debts and personal responsibility for those obligations can affect which chapter is available.

When business debt follows you home

Closing your business does not always end its financial impact. If you remain personally responsible for certain debts, those payments can continue to compete with your mortgage, car payment and other household expenses long after the business closes. Knowing which debts you legally owe can give you a clearer picture of your financial situation. It can also help you better understand how bankruptcy may apply to debt left behind after your business closed.

Can Chapter 13 help you keep your home?

2026-07-01T22:47:52Z

If you have fallen behind on your mortgage payments, you may worry about losing your home to foreclosure. Filing for Chapter 13 bankruptcy may provide an opportunity to catch up on missed payments while protecting your home. For many homeowners in Tennessee, Chapter 13 offers a structured path to regain financial stability without giving up their property. Understanding how Chapter 13 works can help you determine whether it is the right option for your situation.

How Chapter 13 protects your home

When you file for Chapter 13 bankruptcy, the court issues an automatic stay that temporarily stops most collection activities, including foreclosure proceedings. This protection gives you time to reorganize your finances and propose a repayment plan. Instead of paying all overdue mortgage payments immediately, Chapter 13 allows you to repay the arrears over three to five years while continuing to make your regular monthly mortgage payments. If you successfully complete your repayment plan, you can bring your mortgage current and avoid foreclosure.

Who may benefit from Chapter 13?

Chapter 13 may be a good option if you:

Have fallen behind on mortgage payments
Have a steady source of income
Want to avoid foreclosure and keep your home
Need time to catch up on secured or priority debts
Earn too much income to qualify for Chapter 7 bankruptcy

Because Chapter 13 requires regular monthly plan payments, consistent income plays a critical role in successfully completing the process.

What debts does Chapter 13 address?

In addition to mortgage arrears, Chapter 13 can help you manage several types of debt, including:

Past-due property taxes
Car loan arrears
Credit card balances
Medical bills
Certain tax obligations

While Chapter 13 reorganizes many debts, you must continue making ongoing mortgage payments if you want to keep your home.

Can Chapter 13 eliminate foreclosure permanently?

Chapter 13 does not automatically erase your mortgage debt or permanently stop foreclosure on its own. Instead, it gives you the opportunity to catch up on missed payments through a court-approved repayment plan. If you fail to make your required plan or mortgage payments, your lender may ask the court for permission to resume foreclosure proceedings. Successfully completing the repayment plan offers the best opportunity to protect your home over the long term.

Why legal guidance matters

Chapter 13 bankruptcy involves detailed financial disclosures, strict filing requirements and court-approved repayment plans. Small mistakes can delay your case or affect your ability to keep your home. An experienced Tennessee bankruptcy attorney can evaluate your financial situation, determine whether Chapter 13 is appropriate and guide you through each step of the process. With the right legal strategy, you may be able to stop foreclosure and work toward a more secure financial future while remaining in your home.

Can you file for bankruptcy if you just started a new job?

2026-06-23T06:21:26Z

Yes, you can file for bankruptcy after starting a new job. No law prevents you from filing due to fresh employment. However, this chapter in your career may have variables that can affect the type of bankruptcy you can file. Understanding how a new job can impact your filing options is important.

Taking the Means Test for Chapter 7

If you are planning to file for Chapter 7 bankruptcy, it discharges unsecured debts such as credit card bills, personal loans and utility expenses. However, you must pass the Means Test to be eligible for this filing. This involves comparing your average gross income over the six full calendar months with the median income for a household of your size in Tennessee. Filing as soon as you start working in your job might help. Because the six-month period may include a lower income, you may be eligible for Chapter 7. Waiting too long can significantly increase your six-month average, potentially disqualifying you.

Funding a repayment plan

Not qualifying for a Chapter 7 filing does not mean you cannot file for bankruptcy anymore. If you did not pass the Means Test, you will likely file for a Chapter 13 bankruptcy. Unlike Chapter 7, this option creates a three-to-five-year repayment plan that you need to settle with your disposable income. Having a new job can serve as proof of stable income, showing that you can realistically afford the payments.

Seeking further guidance on bankruptcy

Starting a new job is not a deterrent to filing for bankruptcy. However, it introduces new moving parts that require careful planning and calculation. To avoid minor oversights, seeking legal advice is advisable. A bankruptcy attorney can provide the guidance you need to navigate bankruptcy filings in Tennessee.

What happens when your Chapter 13 plan ends?

2026-06-11T15:09:06Z

If you are considering Chapter 13 bankruptcy, you may focus on the monthly payments and the commitment of a three- to five-year repayment period. While that period is an important part of the process, it is not the final step. You may also want to know what happens after you make your last payment. Completing a Chapter 13 plan can lead to the discharge of certain debts and the closing of your bankruptcy case, but several steps typically occur before the process officially concludes.

Completing your Chapter 13 plan: The final steps

Making your final payment does not automatically end your Chapter 13 case. Before the court can close the case, several final requirements may apply:

Completing all scheduled plan payments
Finishing a required debtor education course
Providing requested information to the trustee
Satisfying the terms of the repayment plan
Receiving a discharge order from the court

These requirements allow the court and the trustee to confirm that you have fulfilled the obligations imposed by your repayment plan. Once that review is complete, the court may enter a discharge order and close the case.

What does a bankruptcy discharge mean?

A discharge is a court order that eliminates your personal liability for many debts that remain unpaid when your Chapter 13 plan ends. After the court issues a discharge, creditors generally cannot pursue collection activity on debts covered by that order. However, the scope of a discharge depends on the type of debt involved and the specific facts of your case.

Which debts may still remain?

A Chapter 13 discharge does not eliminate every financial obligation. Certain debts may survive bankruptcy even after you complete all required plan payments. Examples of debts that may survive bankruptcy include:

Paying child support
Paying alimony
Owing certain tax debts
Repaying most student loans

Whether a debt remains enforceable after discharge depends on the nature of the obligation and the circumstances of the case. As a result, outcomes can vary from one filer to another.

What happens to your home, vehicle and other property?

For many people, one of the primary benefits of Chapter 13 is the opportunity to address delinquent payments while retaining important assets. During the repayment period, you may use the plan to catch up on missed mortgage payments or vehicle loan payments over time. Many individuals complete Chapter 13 and keep property that faced the risk of foreclosure or repossession before they filed. In that respect, the financial circumstances at the end of the case may differ substantially from those that existed at the time of filing.

Life after Chapter 13

When your Chapter 13 case ends, the court-supervised repayment process also comes to an end. By that point, you may have received a discharge and resolved financial obligations that contributed to your bankruptcy filing. For many people, the result includes fewer unsecured debts, continued ownership of important property and relief from collection efforts related to discharged obligations. These outcomes reflect the purpose of Chapter 13, which allows eligible individuals to repay debt over time while working to preserve key assets.

What happens if you fall behind on Chapter 13 payments?

2026-05-15T14:18:49Z

You filed Chapter 13 bankruptcy to stop collection pressure and get control of your finances. Then something changes. Your work hours get reduced, a medical emergency happens or your monthly expenses rise faster than expected. If you start missing Chapter 13 payments, you may worry about losing the protections that bankruptcy gave you. In some situations, falling behind on payments can lead to dismissal of the bankruptcy case, which may allow creditors to restart collection efforts. Still, the court may allow certain solutions before that happens.

How Chapter 13 bankruptcy protects you from creditors

Chapter 13 bankruptcy creates a court-approved repayment plan based on your income, debts and property. Instead of paying creditors directly, you will make monthly payments to a bankruptcy trustee, who distributes the money according to the repayment plan. While your bankruptcy remains active, the automatic stay will usually stop many collection actions. That protection may help you prevent foreclosure, stop wage garnishment, avoid vehicle repossession and catch up on overdue mortgage or car payments over time.

What falling behind on payments could mean for your bankruptcy

The bankruptcy trustee will monitor whether you remain current on your repayment plan. If you fall behind, the trustee may file a motion asking the court to dismiss your Chapter 13 bankruptcy. Before deciding whether to dismiss the case, the court will usually review issues such as:

Missing required monthly payments
Experiencing a temporary loss of income
Trying to catch up on overdue amounts
Failing to respond to trustee notices

If the court dismisses your bankruptcy, the automatic stay will end and creditors may restart collection efforts. Those actions could include foreclosure proceedings, wage garnishment, repossession or debt collection lawsuits.

Possible ways to keep your bankruptcy active

Depending on your financial situation, the court may allow changes to your Chapter 13 repayment plan. For example, if your income dropped because of reduced work hours, job loss or a medical condition, you may qualify for lower monthly payments through a plan modification. Some people may also receive additional time to catch up on missed payments. In other cases, converting the bankruptcy to Chapter 7 may become a more realistic option if continuing the repayment plan is no longer financially possible. The available solutions will depend on your income, assets and the length of the financial hardship.

Financial setbacks during Chapter 13 can create serious risks

Chapter 13 repayment plans last several years, and financial problems can happen during that time even if you started the bankruptcy with a stable income. Falling behind on payments can place your bankruptcy protections at risk, especially if the missed payments continue to grow. In some situations, the court may still allow adjustments that help you keep the bankruptcy active. The outcome will usually depend on the reason for the missed payments, how far behind you are and whether the financial hardship appears temporary or long term.

What to do when a creditor files a debt-related lawsuit

2026-04-28T22:53:04Z

Creditors owed money by individuals are often aggressive when attempting to collect. They may call repeatedly, send strongly-worded letters or even threaten to take legal action. If a creditor actually files a lawsuit and serves a debtor, they are at risk of significant, long-term financial challenges. A judgment in favor of a creditor can lead to liens against valuable property or wage garnishment that may worsen the pressure on an individual's budget. Those served with lawsuit documents from a creditor likely need to take immediate action to protect themselves. For many, filing for bankruptcy is the best solution.

Litigation likely favors the creditor

Those facing creditor lawsuits have the right to respond in court. However, provided that the debt itself is valid and the creditor complied with debt collection laws, the courts are likely to rule in favor of the creditor. Even when extenuating circumstances impact a person's ability to repay what they owe, the courts base their ruling on the legitimacy of the financial obligation and the actual payments that have transpired, not circumstances that may look like excuses to creditors. Instead of attempting to convince the courts to dismiss the creditor lawsuit or to defend against the lawsuit, filing a personal bankruptcy can be a faster and more effective solution.

How bankruptcy helps

Personal bankruptcy offers relief from financial pressure through the discharge of eligible debts. Long before that occurs, however, the filer benefits from an automatic stay. All collection activities should halt until the courts dismiss the bankruptcy filing or grant the borrower a discharge. The automatic stay gives a filer time to evaluate their circumstances, rework their budget and possibly negotiate new arrangements with some of their creditors. Any pending lawsuits are typically subject to dismissal once the automatic stay takes effect. Filers then do not need to worry about the added financial pressure that could follow a ruling in favor of their creditor. While a later bankruptcy filing can offer some relief for those already subject to a judgment, avoiding a judgment is often a better option than trying to deal with the consequences of one after a lawsuit. Consulting with a bankruptcy attorney about the different chapters of bankruptcy and the debts that make a filing necessary could help those struggling with overwhelming financial obligations avoid the worst-case scenario. A creditor lawsuit is often a warning sign that attempts to manage overwhelming financial obligations have failed and a more aggressive solution is necessary.

How long does bankruptcy affect my credit score?

2026-04-20T12:37:43Z

It’s no secret that your credit score matters a lot. It influences whether you can rent an apartment, buy a car or qualify for a needed loan. If you are considering bankruptcy, you probably worry about what it will do to your credit. While bankruptcy does lower your score at first, the impact might not be as bad as you fear. For many people with overwhelming debt, bankruptcy actually becomes the first step toward rebuilding their financial health.

What the timeline looks like for credit reports

Different types of bankruptcy stay on your credit report for different lengths of time. Chapter 7 bankruptcy, which wipes out most unsecured debts, remains on your credit report for 10 years from when you file. Chapter 13 bankruptcy, which sets up a 3-5 year payment plan, stays on for 7 years. These timelines might seem long but the bankruptcy notation doesn't carry the same weight throughout that entire period. Many lenders focus on your recent financial behavior rather than something that happened years ago. After two or three years of responsible credit use, many people qualify for mortgages, car loans and credit cards again.

Steps that speed up your credit recovery

You can start rebuilding your credit score immediately after your bankruptcy discharge. All it takes are a few smart and consistent financial decisions, such as:

Get a secured credit card: Start with a secured card requiring a deposit that serves as the credit limit
Pay bills on time: Never miss payments on any remaining bills
Keep balances low: Use less than 30% of your available credit
Monitor credit reports: Make sure all information is correct and track your progress
Credit builder loan: These are small loans designed specifically to help rebuild credit

These habits create a new credit history that gradually outweighs the bankruptcy filing. More importantly, these show lenders that you are handling money more responsibly now.

The truth about rebuilding post-bankruptcy credit

Yes, bankruptcy stays on your credit report for several years. But that does not mean your credit score stays damaged for that long. While bankruptcy temporarily lowers credit scores, many people actually see their scores improve faster than expected. That’s because bankruptcy offers room to breathe and rebuild responsibly. With the financial fresh start bankruptcy provides, you can focus on building positive credit history rather than constantly falling behind. Once you’re no longer drowning in debt you can't pay, you can start making payments on time and building positive credit history.

Does the Tennessee wildcard exemption protect your family assets?

2026-03-11T13:32:10Z

You are a parent managing a household alone after a divorce. Typically, financial pressure builds up quickly when you support children on a single income. You might fear that filing for bankruptcy means losing everything you own. However, Tennessee law provides a powerful tool called the personal property exemption. This rule helps you keep the items that matter most to your family.

Understanding your ten-thousand-dollar shield

Many people worry about losing their car or furniture during a bankruptcy case. Tennessee allows you to protect up to $10,000 in tangible personal property. This "wildcard" applies to almost any physical item you own. Specifically, you choose which assets to save from your creditors. This flexibility allows you to prioritize your children’s needs and your daily stability.

Why Tennessee residents must use state rules

The federal government has its own set of bankruptcy protections. However, Tennessee is an "opt-out" state. This means the state legislature decided that residents cannot use the federal list. You must follow the specific rules and limits created by Tennessee lawmakers. While this limits your choices, the $10,000 wildcard remains one of the most flexible state tools available to you.

Protecting your home equity with homestead laws

If you own a home, you can protect a portion of its value from creditors. This is known as the homestead exemption. In the past, Tennessee used a complex system based on your age and parental status. Fortunately, that has changed with the law becoming simpler for most homeowners. Today, a single person or a single parent can typically protect up to $35,000 in equity.

Keeping your vehicle and home essentials

Tennessee does not have a general law just for cars. Instead, you use your $10,000 wildcard exemption to protect the equity in your vehicle. If your car value stays under this limit, you get to keep it. You may also use a specific $1,900 exemption for tools of your trade if you use your car for work. This ensures your kids have a ride to school and you can reach your job.

Planning your strategy to save property

The best way to use this law effectively is by categorizing your belongings. To start, you can focus on items that provide the most value to your daily life.

Calculate the current resale value of your furniture and appliances.
Check the equity in your primary vehicle.
List personal items like jewelry or family heirlooms.
Identify cash held in your personal bank accounts.

Ultimately, maintaining a simple lifestyle means you get to maximize your $10,000 limit.

Securing a fresh start for your children

Specific laws also protect your children's future separate from the wildcard limit. Tennessee exempts most dedicated clothing, schoolbooks and even specific college savings plans. These protections mean your financial struggles do not have to strip away your children's security. By using these state rules with the help of reliable legal support, you create a stable environment for your family to grow. You can move forward with confidence and a clear path toward recovery.

What if my spouse doesn’t want to file bankruptcy with me in Tennessee?

2026-02-19T02:29:41Z

Yes, you can file bankruptcy individually in Tennessee without your spouse joining. Tennessee follows common law (separate property) rules—not community property—so filing alone is often straightforward and protective. At [nap_names id="FIRM-NAME-1"], we’ve helped many couples in this situation since 1974. Here’s what you need to know.

Key Differences: Individual vs. Joint Filing

Filing Individually

Discharges only your debts; joint debts remain enforceable against your spouse
Protects your spouse’s separate assets and credit score (bankruptcy won’t appear on their report).
Non-filing spouse’s income counts in the Chapter 7 means test, which may affect eligibility.
Jointly owned property (like a home) is usually safe under Tennessee law.

Filing Jointly

Discharges all eligible joint and individual debts for both.
Doubles many exemptions (e.g., homestead, personal property).
Impacts both credit reports but simplifies shared finances.

Protecting the Non-Filing Spouse

Tenancy by the Entirety: Most married couples hold real estate this way in Tennessee. It shields jointly owned property from sale for one spouse’s individual debts.
Separate Assets: Property or accounts solely in the non-filing spouse’s name (e.g., inheritance, pre-marital savings) stay out of the bankruptcy estate.
Joint Debts/Co-Signed Loans: Creditors can still pursue the non-filing spouse after your discharge (Chapter 13’s co-debtor stay offers temporary protection).

Common Concerns

Means Test: Household income (including spouse’s) determines Chapter 7 eligibility.
Credit Impact: Only the filing spouse’s report is affected unless joint accounts go delinquent.
Local Nuance: Chattanooga trustees focus on accurate disclosures—proper planning maximizes protections.

The right choice depends on your debts, assets, and income. Schedule a free consultation with [nap_names id="FIRM-NAME-1"]. We’ll review your situation, run the means test, and explain the best option for your family. Call [nap_phone id="LOCAL-CT-NUMBER-2"] or fill out our online form today - confidential and no obligation. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Can Chapter 13 Bankruptcy help with IRS tax debt?

2025-12-27T00:30:53Z

Tax debt can feel especially overwhelming because the IRS has powerful collection tools, including wage garnishments, bank levies, and liens. Many people are surprised to learn that Chapter 13 bankruptcy can be an effective way to manage IRS tax debt, even when that debt cannot be fully eliminated. For individuals with steady income who need structured relief, Chapter 13 often provides breathing room and a clear path forward.

How Chapter 13 Treats IRS Tax Debt

Chapter 13 bankruptcy is designed to reorganize debt through a court-approved repayment plan lasting three to five years. When you file, the automatic stay goes into effect immediately, stopping most IRS collection actions, including levies and garnishments. This alone can bring significant relief for someone facing aggressive tax enforcement.

Tax debts are handled differently depending on their age and type. Some older income tax debts may be eligible for discharge at the end of the plan, while more recent tax debts generally must be repaid. Chapter 13 allows those nondischargeable taxes to be paid over time in a structured, manageable way.

Priority vs. Nonpriority Tax Debt

In a Chapter 13 case, certain IRS tax debts are classified as priority debts. These typically include more recent income taxes and must be paid in full through the repayment plan. While that may sound discouraging, Chapter 13 often allows you to repay these taxes without additional penalties and sometimes with reduced interest, spread out over several years.

Older tax debts that meet specific legal requirements may be treated as nonpriority unsecured debts, meaning they may be partially paid or, in some cases, discharged at the end of the plan.

Dealing With Tax Liens in Chapter 13

If the IRS has filed a tax lien, Chapter 13 may still help. While the lien itself may remain attached to certain property, the repayment plan can address how much must be paid based on the value of your assets and available income. This can prevent forced collection actions while giving you time to resolve the debt.

One Payment, One Plan

One of the biggest advantages of Chapter 13 is simplicity. Instead of juggling payments to the IRS and other creditors, you make a single monthly payment to the bankruptcy trustee. The trustee then distributes payments to the IRS and other creditors according to the plan approved by the court.

This structured approach can make tax debt feel far more manageable, especially for individuals who fell behind due to job loss, medical issues, or other financial hardships.

Chapter 13 as a Tool for Control and Stability

While Chapter 13 may not eliminate all IRS tax debt, it can stop collection pressure, organize repayment, and provide predictability. For many people, that structure is the key benefit—allowing them to regain control of their finances without fear of sudden enforcement actions.

Understanding how tax debt fits into Chapter 13 bankruptcy can help clarify whether this option aligns with your financial goals. For those struggling with IRS obligations alongside other debts, Chapter 13 is often less about wiping the slate clean and more about creating a realistic, court-protected plan to move forward.