This is a question that isn’t always easy to answer. Many people have been overwhelmed by debts for years, not ever having enough money to pay them off, leaving them drowning in debt for far too long. Below you’ll find some advice on what types of situations are ideal for bankruptcy, and when you might benefit the most.
The Right Chapter
When looking into bankruptcy, it is important to understand the difference between the two main Chapters under which people file. Chapters 7 and 13 are both designed to help resolve debt, but they do so in different ways.
Chapter 7
Chapter 7 is known as the “liquidation” chapter because it involves discharging and permanently erasing your unsecured debts. Some benefits of Chapter 7 include:
- Can wipe out debts from credit cards, utilities, personal loans, and other unsecured debts.
- The fastest debt relief option under any bankruptcy chapter (3-5 months)
- Allows debtors to keep property that falls under the exempt categories
- No monthly payments
- Halts all creditor harassment immediately once filed
Chapter 13
Commonly known as the “restructuring” chapter, Chapter 13 bankruptcies do not require you to liquidate any assets to gain debt relief. It is also an option when if you exceed the income requirements for Chapter 7.
Chapter 13 bankruptcies take longer to complete, but they do have the ability to stop actions such as foreclosures and repossessions, as well as immediately halt any creditor actions against you.
Debt Limits
There are two main types of bankruptcy that individuals and families file for; Chapter 7 and Chapter 13 of the U.S. Bankruptcy Code. If filing under Chapter 7, there is no limit to how much debt you are allowed to have in order to file, but there are restrictions based on income.
In order to qualify under Chapter 7, you must make less than the median income in Tennessee. If you make more, you must then take the means test to determine whether you have enough disposable income to pay your debts. If you do, you will most likely be directed to file under Chapter 13.
Contact our Tennessee Bankruptcy Team Today
With over 50,000 cases filed, we completely understand just about every reason as to why someone would have to file for bankruptcy. We are prepared to offer compassionate and personalized services to all clients to ensure that we can help you get back on your feet as quickly and efficiently as possible.
If you are considering filing for bankruptcy, but are unsure of where to start, do not hesitate to contact us today for your free consultation through our website, or give us a call at (865) 328-7993!