Middle Tennessee Bankruptcy Blog

A common perception that many in Nashville may have is that personal bankruptcy simply offers one who has been irresponsible in their financial decision-making a way to avoid the consequences of their actions. The fact that most who seek bankruptcy protection file under Chapter 7 may seem to reinforce this fact. Indeed, according to information compiled by the American Bankruptcy Institute, 127,545 of the 200,159 non-business bankruptcy filings from the second quarter of the 2018 fiscal year were Chapter 7 cases. Yet a closer examination of Chapter 7 eligibility requirements reveals that there are several steps one must take before the opportunity to file under this Chapter even becomes an option. 

One of those is to go through credit counseling. The website for the Administrative Office of the U.S. Courts shows that one seeking Chapter 7 bankruptcy protection must first complete credit counseling offered by an approved agency. Some might say that this is just a formality, yet the court does indeed consider the findings of a credit counselor when reviewing one's bankruptcy petition. 

If you are one of the many Americans who struggle with credit card debt, medical expenses, mortgages and other bills, you may have been contacted by creditors regarding your late payments. Businesses often turn your unpaid, deficient amounts over to a collections agency, who will contact you in an attempt to collect. Collector phone calls may become burdensome, and in some cases, may be considered harassment. Once you file for Chapter 7 bankruptcy, however, you will be saved from harassing creditor phone calls while your bankruptcy is being processed.

An automatic stay is issued to your creditors once your bankruptcy documents are filed with the courts. It is important to include a complete list of creditors in your bankruptcy documents, as they are the agencies who will receive an alert to stop attempting to collect on your debt. After the automatic stay is in place, collection agencies cannot contact you, garnish your wages and initiate or pursue lawsuits. You may fell a sense of relief once your bankruptcy paperwork is filed and you finally stop receiving threatening collector’s calls.

Chapter 7 bankruptcy is a viable option for individuals who have an insurmountable amount of certain types of consumer debt. This legal process allows an applicant to discharge specific types of debt and emerge to a better and more stable financial future. If you are considering this step, it can be helpful to understand how this process works and what you can expect after it is final.

Many people hesitate to file for Chapter 7 bankruptcy because they are unsure of how it really works. There is a lot of misunderstanding and stigma surrounding bankruptcy, but in reality, it could be a beneficial and positive step for you. It is possible to rebuild your credit and enjoy a future free from harassing phone calls from creditors and debt collectors. 

There are many advantages to filing Chapter 13 bankruptcy for those who are able. However, filing for Chapter 13 bankruptcy in Tennessee means meeting certain eligibility requirements in regard to the debt that one owes, as well as the income that one earns. There are limits to the amounts of debt that one can owe and still qualify for Chapter 13 bankruptcy. Specifically, according to the United States Courts, one must owe less than $1,184,200 in secured debt and no more than $394,725 in unsecured debt.

Therefore, in order to gauge one's eligibility for Chapter 13 bankruptcy, one must understand the difference between secured debt and unsecured debt. According to FindLaw, a secured debt is one in which the creditor has the right to take away a specific piece of property if the debt is not repaid. Secured debt includes mortgages and car loans because if the borrower falls behind on payments, the lender has the right to foreclose upon the home or repossess the car.