Some Tennessee residents may be able to file for bankruptcy to get a better handle on their finances. Both individuals and businesses can file for protection from creditors, and there are many different types of bankruptcy to choose from. Chapter 7 bankruptcy is known as a liquidation bankruptcy. It involves selling some or all of a debtor’s nonexempt property in an effort to raise money to pay off creditors.
To qualify for a liquidation bankruptcy, an individual will need to pass a means test. A person who fails the means test may be required to file for Chapter 13 bankruptcy instead. A Chapter 13 case is known as a reorganization bankruptcy, and it can also be referred to as a wage earner’s plan. Whereas a Chapter 7 case can be resolved within months, a Chapter 13 case can last for up to five years.
During this time, a debtor will make payments to creditors under the terms of a plan that the debtor proposes. Creditors and the trustee overseeing the case will need to approve the plan, and a judge will also need to sign off on a proposed plan. Chapter 11 bankruptcy is similar to a Chapter 13 case, but it is most often used by businesses or individuals who have too much debt to qualify for Chapter 13 protection.
Those who are looking for a fresh financial start may find it by filing for bankruptcy. A lawyer could explain the filing requirements, such as taking a credit counseling course prior to doing so. Debts may eventually be discharged in a period of months, and debtors generally get a stay from creditor contact while a case is ongoing. Instead, calls or letters will be sent to a debtor’s attorney.