Debt relief through
Chapter 7 bankruptcy

A Chapter 7 Bankruptcy allows you to discharge most or all your debts while retaining most or all your property

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Chapter 7

A Chapter 7 Bankruptcy is a total discharge of your debts. If you are eligible you can keep most or all of your assets including cars and home and get rid of most or all of your debts. In Tennessee most of your assets are exempt from reach of your creditors. Call or click for a free appointment to see if you’re eligible to quickly and easily get out of all your debt through a Chapter 7 Bankruptcy.

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What is a Chapter 7 Bankruptcy?

A Chapter 7 Bankruptcy is the sale of nonexempt assets and the discharge of debts, otherwise known as a liquidation. When an individual files for Bankruptcy, creditors are no longer able to collect or attempt to collect any debts, so lawsuits, foreclosures, garnishments and even phone calls or billing statements must stop. 

An asset that may be sold is one that is not covered by a state or federal exemption law. In Tennessee most items of personal property like cars and cash may be exempt, and your home may be exempt as well by electing your homestead exemption.

After the bankruptcy is filed and all the debtor’s duties are satisfied, the court will grant the discharge of debts. The discharge releases the debtor from personal liability on most debts and prevents the creditors from taking action against the debtor.

In Chapter 7 Bankruptcy, the “means” test determines whether you make too much income to qualify to file. The means test compares your average monthly income to the median income in the state where you live. If your average income exceeds the median income for your household size, then it is possible you do not qualify to file for Chapter 7 Bankruptcy. Even if your income exceeds the median income for your household size, you still may be eligible to file for Chapter 7 depending on other variables such as expenses for rent, child support, or alimony. Call or click for a free appointment to see if you qualify for Chapter 7 Bankruptcy based on the means test or other circumstances. Whether you qualify can be a complicated series of tests, and falling into one of the Chapter 7 Bankruptcy traps can be difficult to get out of. If you need the advice from an affordable bankruptcy lawyer, let me know.
A clipboard checking off a list of qualification requirements for Chapter 7 Bankruptcy

There are generally three qualification requirements for Chapter 7:

  • You cannot have received a previous Chapter 7 discharge within 8 years
  • You cannot make more than the median income for your household size
  • You must take a credit counseling course
Hands holding up a house, money, and a car representing the bankruptcy protection of the automatic stay

In most cases, yes. Only property that is not exempt or does not have a creditor lien attached to it may be sold. For most debtors all property is exempt; however, it is important to speak with an attorney to be sure that your property will be exempt if you file for Chapter 7 Bankruptcy.

In Tennessee debtors can exempt up to $20,000 worth of personal property, which includes household goods, electronics, cash, and cars. Real property can be exempt depending on the debtor’s homestead exemption.

There is no minimum debt requirement to file; however, there are factors that may be relevant about whether you should file. Some factors include whether you are able to pay your debts outside of bankruptcy, whether your creditors are willing to work with you, or whether your debts may be discharged through bankruptcy at all. You may wish to consult with an attorney to see if you should file based on the amount and types of debt.
Debt relief coin pile
Pen signing bankruptcy forms

Filing Chapter 7 Bankruptcy usually follows the following steps:

  1. Prepare your bankruptcy forms
  2. Take your credit counseling class
  3. Sign the forms and bring them to your nearest federal bankruptcy court
  4. Attend a 341 hearing
  5. Take a second course in financial management
  6. Pay your bankruptcy filing fee

Filing for bankruptcy may seem complicated; however, for most individuals the cases can be routine. Filing for bankruptcy includes preparing forms that list your financial affairs, assets, debts, income, and expenses. The forms can be found here. You must also take a mandatory credit counseling course before filing. This course can be completed easily online or over the phone at a provider such as access counseling.

Once your forms are complete and your credit counseling course is taken you can file them by taking them to the nearest bankruptcy court. There is a filing fee of $335 for a Chapter 7 Bankruptcy. Make sure your forms include your most current address. Update your address if it changes after filing your case. You will be notified by mail of a meeting date that you must attend. You must also take a second course in financial management after filing your case.

Once your duties are fulfilled, your discharge can be granted. You may wish to consult with an attorney who can assist you through the process.

A Bankruptcy can have a negative impact on your credit. However, for most individuals who file for bankruptcy, their credit can be rehabilitated and their ability to obtain a credit card, auto loan, and mortgage can improve after filing. 

Chapter 7 Bankruptcy can remain on your credit report for up to 10 years; however, it also discharges high interest credit cards, finance loans, judgments, and collection accounts. Removing these debts from your credit report will improve your credit. An individual who files for bankruptcy can take strategies to reach a 720 to 800 credit score within 5 years after filing.

Credit score odometer representing a good credit score after filing chapter 7 bankruptcy

If your credit score is poor. Filing Chapter 7 will wipe away adverse accounts giving you a fresh start to rebuild your credit.

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