When extended periods of financial pressure have taken their toll, filing bankruptcy can appear as a light at the end of the tunnel. However, many Tennesseans in these tough situations are confused in regard to what, exactly, bankruptcy might mean. Above all else, Chapter 7 bankruptcy aims to help consumers get back on a balanced financial track and get back to their lives. Below are some additional aspects involved in this type of plan.
The United States Courts provides accessible information on bankruptcy options for the public. Known as the “liquidation” bankruptcy route, Chapter 7 bankruptcy does not involve a repayment plan (such as with Chapter 13). Instead, a debtor’s nonexempt assets may go to a bankruptcy trustee, who may then sell the assets and use the proceeds to pay creditors. This step generally must adhere to the provisions of the Bankruptcy Code. When it comes to the qualifications, those filing Chapter 7 may be subject to a means test, which measures the debtor’s income to test whether the filing is abusive. From there, the debtor usually connects with the trustee to provide any additional financial documents for the process.
With all of the information available on Chapter 7 bankruptcy, it is easy to see why so many consumers feel as if they are in the dark when it comes to taking action. NerdWallet offers another angle from which one can view bankruptcy procedures, focusing particularly on why Chapter 7 might work for some, but not others. For instance, Chapter 7 might be ideal for those who have no assets; a debtor may also choose this route if debts total more than half of his or her annual income. While not all debts can be cleared through bankruptcy, NerdWallet concludes by noting that debtors have a wide range of options when taking on this challenging but life-changing task.