There are usually only two ways for individuals in Tennessee to file for bankruptcy: Chapter 7 and Chapter 13. Each involves eligibility requirements relating to the amount of debt you owe and the amount of income you bring in each month. Often, you will be eligible for either one or the other, but at Rothschild & Ausbrooks, we have seen situations in which people have qualified for both Chapter 7 and Chapter 13. If this is the case, you have a choice between the two. Each has strengths and weaknesses but, depending on your situation, Chapter 13 offers advantages that may make it more suitable.
If you worry about losing any of your assets, such as your car and home, upon filing for bankruptcy, Chapter 13 may be the better option for you. While Chapter 7 involves liquidating assets to satisfy your debts, Chapter 13 reorganizes your debt into a repayment plan. There is no chance of losing any of your property if you file Chapter 13.
Another advantage of Chapter 13 is that you know going into it that the repayment plan will work for you because it derives specifically from your financial situation and income. Under your repayment plan, you will only pay off a portion of some debts but pay off others entirely.
According to FindLaw, the duration of your repayment plan varies depending on your income in relation to state guidelines but typically lasts from three to five years. You may be able to convert your Chapter 13 bankruptcy into a Chapter 11 bankruptcy if you find yourself unable to make payments according to your repayment plan. More information about Chapter 13 bankruptcy is available on our website.