Tennesseans who are considering filing Chapter 7 bankruptcy often deal with a myriad of questions and concerns. For one, making the decision of filing bankruptcy alone can prove challenging. Secondly, navigating the rules of each plan can seem complex and even intimidating. The last major step — and perhaps the most stressful — involves appropriately completing each stage of the process so a new life chapter can begin.
The United States Courts website provides insight into Chapter 7 bankruptcy specifically, noting the basics of this plan. First and foremost, debtors with monthly incomes higher than the state median must take what the Bankruptcy Code calls a “means test,” which determines whether this type of filing is presumptively abusive. Further details on this step are listed on the courts’ website. Other basics involve eligibility: individuals, corporations or business entities and partnerships may qualify. Once qualified, debtors generally must file petition with a local bankruptcy court, as well as schedules of assets and liabilities, financial statements, schedule of current income, tax returns and other documents. From there, each case may determine the steps that follow.
Understanding the general process may help Tennessee debtors validate decisions to file bankruptcy altogether. The Consumer Recovery Network takes a step further and examines the pros and cons of turning to a Chapter 7 bankruptcy plan, noting that it can create a clean slate. However, consumers should be aware that this process takes roughly three to six months, and that each situation may determine which assets can be preserved. Chapter 7 bankruptcy can also remain on one’s credit report for up to 10 years. Also known as a liquidation bankrupcy, Chapter 7 generally means that debtors do not owe any non-exempt assets; Consumer Recovery Network also points out that creditors do not receive payments from debtors with this type of bankruptcy.
Chapter 7 is the most popular form of bankruptcy in the nation, making it possible for countless consumers to start anew. While this plan may have its own share of both advantages and disadvantages, it can allow consumers to recover from past burdens and open the doors to financial freedom.