In 2015, Tennessee had the highest rate of bankruptcy filings in the nation; as a matter of fact, the number of filings there was twice the national average. Ergo, the citizens of this fine state are no strangers to the terror that comes with the possibility of not being able to meet their obligations. Moreover, the entire process of filing for bankruptcy can be confusing given the amount of legal red tape surrounding the whole process. For instance, plenty of people are confounded by the difference between Chapter 7 and Chapter 13 bankruptcy.

Even though both Chapter 7 and Chapter 13 help absolve debtors of their burden, they reach this end in different ways. Chapter 7 dictates that the debtor’s non-exempt assets be liquidated. Conversely, Chapter 13 allows a debtor to restructure their debt and enter into a repayment plan.

Apart from the difference between Chapter 7 and Chapter 13, some people might be unclear on what type of debt is eligible for being discharged in bankruptcy as opposed to the type of debt that sticks. With this in mind, a good rule of thumb to remember is that most debt can be discharged with the exception of debts owed to the government, HOA dues, taxes, student debt, and child support or alimony payments.

Nevertheless, there are still exceptions to that rule: For example, student loans can be discharged in the event that the debtor can pass the ‘Brunner test,” a test where they are able to indicate that the debtor is unable to sustain a minimum standard of living under the weight of the debt. Anyone contemplating the possibility of filing bankruptcy may benefit from reaching out to an experienced bankruptcy lawyer.

Source: Memphis Daily News, ‘Why is Tennessee’s Bankruptcy Rate So High?” May 7, 2016