If you need debt relief, you have probably spent a lot of time looking at all of your options. In doing so, you’ve determined that bankruptcy is most likely the right fit, but you are still lost as to which type of bankruptcy is right for you. There are two primary types of personal bankruptcy available to Tennessee residents, both of which have different qualifying factors and completely different approaches to debt relief.
Chapter 7 bankruptcy is sometimes referred to as liquidation, as some assets may need to be sold to pay back creditors, but that does not mean you’d lose everything. Bankruptcy exemptions protect certain property from liquidation. It is for people who lack the means to pay their creditors and need their qualifying debts discharged. Most people qualify for this form of bankruptcy.
Chapter 13 bankruptcy, on the other hand, is a repayment plan. If your petition is approved, you’ll have to make monthly payments to a trustee who will then disperse the funds to your creditors. These payments will have to be made for three to five years. At the end of the repayment period, any remaining debt that qualifies for discharge will be discharged.
Which type of is right for you depends on your goals and your income level. If you make too much based on Tennessee’s median income level for the year, Chapter 7 relief will not be available to you. If you want to keep all your assets, Chapter 13 may be the better way to go. Legal counsel can talk you through both types of bankruptcy and help you determine which would better suit your needs. To learn more, please take a moment and visit our firm’s website.