CHAPTER 7 | BANKRUPTCY
QUALIFYING FOR CHAPTER 7
The majority of bankruptcy cases are filed under Chapter 7 of the bankruptcy code. Chapter 7 bankruptcy provides an opportunity for those experiencing serious issues to get a fresh start through the elimination of most, if not all, debt. Chapter 7 bankruptcy is best suited for those who are having difficulty paying their credit card bills, medical bills, or who are dealing with a wage garnishment or lawsuit. Such debts are typically completely eliminated through chapter 7 bankruptcy.
QUALIFY FOR CHAPTER 7 BANKRUPTCY
In 2005 Congress overhauled the bankruptcy code. These changes to the bankruptcy code made it more difficult for some to file chapter 7 bankruptcy; however for most chapter 7 bankruptcy relief is still readily available.
Under the new bankruptcy code, you must qualify to file a Chapter 7 bankruptcy. We determine if you qualify by analyzing your financial situation, including your monthly income, household size, and monthly expenses to determine if you qualify. Your income must be at or below the average income for families your size in your county of residence. If your income exceeds the median income for your household size in Tennessee, you may need to file a Chapter 13 bankruptcy.
Is important that we evaluate your specific financial situation to determine if bankruptcy is a good option. The amount that you owe is not as important as your ability to repay. If you have a relatively small amount of debt but also have very limited income then bankruptcy may be a good option.
Chapter 7 bankruptcy, or straight bankruptcy, is a liquidating process. This means that if you have assets that you own free and clear of any liens, the bankruptcy court can use those assets to pay off your creditors. The good news is that most assets are considered exempt under Tennessee and federal law. This means that even though you own a particular asset outright, it will be protected during the bankruptcy process.
The Tennessee homestead exemption protects certain amounts of equity in your home. There are also exemptions for household goods, vehicles and retirement accounts like 401(k)s and IRAs. Most people do not lose any assets during the chapter 7 bankruptcy process.
Chapter 7 bankruptcy is best suited for unsecured debts, credit card debt, medical bills, civil judgments and unsecured loans. However not all unsecured debts are discharged in a chapter 7 bankruptcy. The following are typical debts that are not discharged:
Unpaid taxes, although there are some exceptions to this rule:
- Student loans
- Child support
- Criminal fines
- Secured loans such as car payments and house payments
THE CHAPTER 7 PROCESS
FILE A CASE
Once all the documents and information have been gathered, and you have completed an online credit counseling course, your bankruptcy documents have been prepared, we will file a case with the bankruptcy court in Nashville.
Upon the filing of your case, the automatic stay goes into effect preventing all collection efforts by your creditors. This means that collectors cannot call you, your wages cannot be garnished, and your home cannot be foreclosed on.
MEETING OF CREDITORS
Once your case is filed, a 341 Meeting of Creditors will be scheduled and you will be required to attend that meeting with the bankruptcy trustee assigned to your case. I will attend that meeting with you in the bankruptcy court located in Nashville, Tennessee.
At the meeting of creditors, the bankruptcy trustee and your creditors will be given an opportunity to ask you questions. In the majority of cases creditors do not appear to question you. Typically your trustee will ask you about the truthfulness of the schedules filed in your bankruptcy case.
Approximately 60 to 120 days after your Meeting of Creditors the bankruptcy court will enter your discharge. This is an order from the Bankruptcy Court that officially eliminates your dischargeable debts. Prior to the entry of the discharge, you will be required to attend a second credit counseling class that can be done online.