When Tennessee residents are having trouble paying their bills, there are a few options for debt relief available. Bankruptcy is sometimes the best way to clear debts and begin rebuilding credit. There are two primary types of bankruptcy filing for individuals. Financial changes that happen after the bankruptcy filing may have some effect on the proceedings.

Chapter 7 is a liquidation bankruptcy that involves the liquidation of a debtor’s non-exempt assets with the proceeds being used to repay creditors. There are income requirements to qualify for Chapter 7 bankruptcy. Someone who does not qualify or who wishes to pay a portion of their debts back without liquidating assets could file for Chapter 13. This is a repayment plan that creates affordable payments that the debtor must pay for a certain period of time, after which much of the remaining debt is discharged.

If someone who has filed for Chapter 7 bankruptcy gets a raise in pay or has another increase in income, the case is not affected. However, the situation is different with respect to Chapter 13. A portion of the increased income must be surrendered to the trustee and the monthly payment adjusted. This is because the repayment amount is based on the debtor’s ability to pay. However, it is possible that the trustee will not choose to file a motion to increase the payments.

Bankruptcy is designed as a way for someone who is in debt to get a fresh financial start. Chapter 13 is designed for people who have a regular source of income, and in some cases it can allow them to avoid foreclosure and keep their homes. There are eligibility requirements that an attorney can outline.