There are many contributing factors that are associated with financial adversity. Some common reasons include heavy debt, divorce, losing one’s job, serious illness, or foreclosure.
In fact, the average credit card debt in Tennessee is a whopping $5,205 per person. In addition, foreclosure rates are also as staggering, one out of every 2,688 TN homes is currently in foreclosure.
If you can relate to the scenarios above, then you are more than likely battling other personal problems that come with living in debt. The fear of losing your automobile, home or your income can drain a person physically. You may have even considered Filing for Bankruptcy .
If you are thinking “Is Bankruptcy Best For Me?” you are undoubtedly not alone. Close to a million people file bankruptcy each year in the US. Bankruptcy is a device established by the US Government to help struggling Americans find relief from overwhelming debt. You may want to research bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy gives people the opportunity to lift their financial burden while still working with lenders in a legal capacity. It is initiated by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by an individual or married couples jointly. When the bankruptcy is finished, the filer will ‘exit’ with a fresh new start.
Throughout the bankruptcy, a trustee is appointed to oversee the particulars of the matter. His or her responsibilities differ and depend on whether the individual has filed for Chapter 13 or Chapter 7 bankruptcy.
Did you know that Tennessee ranks #1 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 610 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
Individuals or couples in Tennessee, who claim bankruptcy, will elect to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. What is the difference? Look below for more information
The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.
The proceeds collected during liquidation will be used to repay debtors that were listed on the bankruptcy filing.
If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. The individual will be allowed to keep his or her valuable assets over a 3- to 5-year time frame.
In order to decide which chapter an individual will file, he or she will have to assess their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The ultimate goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It considers your:
- income and expenses
- household size and composition
- debt-to-income ratio
If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.
What Are Bankruptcy Exemptions?
Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
Unless otherwise noted, all law references are to the Tennessee Code Annotated.
- $5,000; $7,500 for joint owners. Tenancies by the entirety are exempt without limit as to debts of one spouse. Spouse or child of deceased owner may claim. May also claim a life estate or a 2 to 15 year lease. If over 62 years of age, $12,500 for single people and $20,000 for married people; $25,000 if spouse is also over 62 years of age.
- Clothing and storage containers; schools books, pictures, portraits, and bible.
- Health savings accounts.
- Health aids; lost earnings payments for yourself or a person you depended upon; personal injury recoveries up to $7,500; wrongful death recoveries up to $10,000 (total of personal injury claims, wrongful death claims, and crime victims’ compensation cannot exceed $15,000).
- Burial plot up to 1 acre.
- The greater of the following: 30 times the federal minimum hourly wage or minimum of 75% of disposable weekly income, plus $2.50 per week per child. Judge may approve more for low income debtor.
- Wages of debtor deserting family, in hands of family.
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,283,025.
- Public employees.
- State and local government employees.
- ERISA-qualified benefits.
- Relocation assistance payments.
- Unemployment compensation; veterans’ benefits; Social Security; local public assistance.
- Crime victims’ compensation up to $5,000 (for limits, see “Personal Property,” above).
- Workers’ compensation.
- Old-age assistance.
- Aid to blind.
- Aid to disabled.
Tools of Trade
- Tools, books, and implements of trade up to $1,900.
Alimony and Child Support
- Alimony and child support which is owed for at least 30 days prior to filing for bankruptcy.
- Disability, accident or health. benefits, for a resident and citizen of Tennessee.
- Disability or illness benefits.
- Life insurance or annuity.
- Fraternal benefit society benefits.
- Educational scholarship trust funds and prepayment plans.
- You can exempt up to $10,000 of any type of personal property.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
Current bankruptcy laws do not require individuals to hire a lawyer to declare bankruptcy relief. People are permitted to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Going it alone is not an easy task.
Filing Bankruptcy without an Attorney
A simple Chapter 7 proceeding that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t involve an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
For most people, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy lawyer is there to represent you and not in the interest of creditors.
An attorney is also accustomed with exemption laws. In addition, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in TN, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Tennessee
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In TennesseeHoward H. Baker Jr. United States Courthouse
800 Market Street
Tennessee Eastern Bankruptcy Court
James H. Quillen United States Courthouse
220 West Depot Street
Tennessee Eastern Bankruptcy Court
Historic United States Courthouse
31 East 11th Street
Tennessee Eastern Bankruptcy Court
Additional Tennessee Resources
Foreclosure Help Program
Disability SSDI Benefits