When an individual in Tennessee is struggling to pay his or her debt, it may be possible to file for Chapter 13 bankruptcy. Debts are repaid according to a plan approved by the court, and a plan must be submitted within 15 days of filing for bankruptcy. A judge will make a decision as to whether to confirm the plan within 45 days of a meeting with creditors. Creditors then have 25 days to object to a plan.
Debt balances are classified as priority, unsecured and secured. Priority payments include costs related to the filing itself, taxes owed and child support. These obligations must be paid in full unless the creditor agrees to change its status. As a general rule, unsecured creditors will not need to be paid in full over the course of the repayment plan. However, debtors must generally commit disposable income toward paying off unsecured debt.
Furthermore, they must receive at least as much from the plan as they would if a debtor went through Chapter 7 bankruptcy instead. Secured creditors must generally receive at least the value of the collateral, and in some cases, they could be entitled to the full balance that they are owed. If payments are not made in accordance with an approved plan, a Chapter 13 case can be converted to a Chapter 7 case.
Filing for bankruptcy may allow an individual to obtain a fresh financial start. It may also allow a person to retain property such as a house or car during the repayment period. Generally, a creditor cannot take action to foreclose on a home or repossess a vehicle while a case is ongoing. An attorney may be able to explain the process of creating an adequate debt repayment plan and other benefits of bankruptcy.