Tennessee residents who are considering filing for bankruptcy may have several available options. One possibility is to file for Chapter 7 bankruptcy, which is also referred to as a liquidation bankruptcy. In this type of filing, nonexempt assets are sold off with the money used to repay creditors. A key benefit of Chapter 7 protection from creditors is that debts are generally discharged in a matter of months as opposed to a matter of years.
This is beneficial because lenders generally won’t want to work with debtors until after the bankruptcy case is over. However, a debtor will need to pass a means test to qualify for Chapter 7 protection from creditors. Generally speaking, those who have little or no disposable income will be allowed to file while others will need to file for Chapter 13 protection instead.
While there are many potential benefits to filing for Chapter 7 bankruptcy, there are also several downfalls. For instance, a credit score typically falls after a filing, and an individual may face limited options when applying for credit. Those who are struggling to repay debt are encouraged to reach out to their lenders first. It’s often possible to make alternate arrangements to avoid a foreclosure or repossession.
Individuals who are seeking debt relief may be able to find it by filing for bankruptcy. An attorney could explain the benefits, such as putting an end to creditor contact. Furthermore, a repossession or foreclosure may be postponed while the case is ongoing. Certain debts that are not repaid in full could be discharged at the end of a liquidation or reorganization bankruptcy case. Filing for bankruptcy may also provide a chance to renegotiate existing secured loan repayment terms.