Debt has become a constant companion for most Tennessee residents. Hopefully, ‘good” debt is used as leverage to further advance economic interests and ‘bad” debt is minimized and managed only as a tool of last resort. Unfortunately, unexpected circumstances can occur that place the total debt, from whatever source, beyond the individual’s ability to pay. No one gets to the point of considering bankruptcy lightly, but sometimes there is simply no other alternative than to seek a fresh start.

When money starts becoming an issue, financial strategists suggest taking a hard look at the household expenses and any ways to increase income. If there is no room to cut back, no possibility to earn more and expenditures are exceeding income each month, bankruptcy may be a realistic option. Based on the type of debt and the total household income, an individual may qualify for either Chapter 7 or Chapter 13 bankruptcy protection.

Protection is an important term. Once a bankruptcy is properly filed with the court, all attempts to collect a debt are stayed pending the conclusion of the bankruptcy proceedings. This can provide the person some much-needed breathing room to organize his or her finances and make difficult decisions. Chapter 7 is considered more of a liquidation, with most of the debt extinguished and the debtor retaining only minimal personal property. Chapter 13 is a reorganization of debt and repayments for individuals with sufficient monthly income. Certain types of debt, such as alimony, child support and taxes, are not dischargeable under either.

Bankruptcy proceedings require precise filings and may take several months to complete. An experienced bankruptcy lawyer can offer counsel and guidance on whether Chapter 7 or 13 is the right path based on the client’s circumstances.