Many people in Tennessee struggle to make ends meet, even if they have significant assets or properties that they want to keep or make a substantial salary. Credit card debt, medical bills and other expenses can put people’s financial health and credit rating at severe risk, especially when they wind up dealing with creditor calls and debt collectors. People often think that they can only declare bankruptcy if they give up all of their assets. However, Chapter 13 bankruptcy offers an option that allows people to retain their property while paying off their debts through a special, court-approved repayment plan.

Instead of liquidating assets to cover a portion of their debts, people in Chapter 13 bankruptcy develop a repayment plan to cover some of the amounts that they owe. Mandatory credit counseling is part of the Chapter 13 process, and people work with their counselors to develop an achievable repayment plan. In general, people can pay back less than the total that they owe, so the court must approve the plan before it goes into effect. The bankruptcy judge may require certain types of modifications before approval.

Once the plan is in effect, people are required to make their payments to a trustee, who will manage their distribution to creditors. It is particularly important to maintain the payments during the bankruptcy period. If people fail to keep up with their repayment plan or mortgage payments, they could once again face foreclosure or debt collection efforts.

Many people hesitate to file for bankruptcy because they are concerned about long-term effects on their credit, but Chapter 13 bankruptcy remains on a credit report for seven years rather than the 10 of a Chapter 7 filing. A lawyer may provide advice and guidance about Chapter 13 bankruptcy and how people can take action to seek debt relief.