Sometimes the hardest part about declaring bankruptcy is deciding whether or not it is truly your last resort. While there is not a specific process by which this may be determined, odds are you should declare bankruptcy in Tennessee if you: have lost a job and have been unemployed for sometime, can’t find a way out of debt within the next five years, and can’t make your minimum payments. There are two basic types of bankruptcy that an individual may file: Chapter 7 and Chapter 13. While the former will discharge most of your debts, the latter will stop your house from being foreclosed upon and set up a payment plan with your creditors.
When you declare Chapter 7 Bankruptcy in Tennessee, you’ll be happy to know that all of your old debt will be discharged; it’s like being able to start all over again. Take note that the following debts can not be discharged: alimony, child support, recent back taxes, student loans, recent large purchases, and debts owed to the government. In order to file, you must make less than the median annual income for the state of Tennessee. For 2008 this number happened to be $36,380 for an individual and $46,039 for a family of two. This test is known as the means test.
Chapter 13 bankruptcy in Tennessee is a bit different from Chapter 7 as it does not discharge your old debts. Instead, it allows you to work with your creditors in order to develop a method by which you may have your debt paid off within the next three to five years. The main reason why someone would prefer to file this form of bankruptcy is because it will stop any foreclosure on their homes for property by their creditors.
The most important thing to take into consideration when filing for a bankruptcy in Tennessee is what exemptions you will be able to declare. Simply put, an exemption is a type of property that the state has ordered creditors not to take from you, but only if you declare it. A few examples of the many different exemptions allowed in the state include: homestead up to $5,000, bible, schoolbooks, pictures, portraits, clothing, storage containers, burial plots, health aids, certain insurance proceeds and benefits, and $4,000 worth of personal property. See your lawyer for a more detailed list.