Bankruptcy is a legal process allowing an individual or business to have some or all of their debt discharged. It is almost always considered as a last resort because it can have some negative long-term consequences which must be considered, even if you ultimately decide that they are outweighed by the benefits. Bankruptcy is a creation of federal law, and goes through federal courts. Therefore, the procedure governing bankruptcy in Tennessee will be roughly the same as it is anywhere else in the U.S. But individual courts have different rules for what property is exempt, so you should consult a local Nashville, Tennessee before you file.
Chapter 7 Bankruptcy in Nashville, Tennessee
There are 2 common forms of consumer bankruptcy in Nashville, Tennessee: Chapter 7 and 13. Chapter 7 bankruptcy involves a liquidation of some of the debtor's assets, which pays off part of his or her debt. Once this is done, the remaining debt is discharged. Fortunately for debtors, many types of property are exempt from liquidation, including homes, vehicles, essential personal items, and retirement accounts.
Once the eligible property is sold, and the funds transferred to the creditors, the dischargeable debt is excused. Some types of debt, however, can't be discharged in Chapter 7 Bankruptcy in Nashville, Tennessee. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be discharged, Chapter 7 might not be the best choice for you.
Chapter 13 Bankruptcy in Nashville, Tennessee
Chapter 13 Bankruptcy in Nashville, Tennessee is very different from Chapter 7. Whether or not it is a better option is highly dependent on the facts of each individual case. Chapter 13 does not eliminate any debt, but it creates a new payment plan that should give the debtor some breathing room. Usually, all of the debts are consolidated into 1 periodic payment. While this might make it take longer to pay off the debt, if the debtor is willing to make a few sacrifices, the plan should be manageable.
Which Type of Consumer Bankruptcy Should I File in Nashville, Tennessee
The answer to this question depends heavily on your individual situation. If you have enough steady income to manage a payment plan, and a lot of non-exempt property that you are unwilling to part with, Chapter 13 might be a good option. If you don't have much steady income, and most of your property is exempt, Chapter 7 might be better.
Of course, you should always seek the counsel of an experienced local Nashville, Tennessee bankruptcy attorney before you make the decision to file. He or she will be able to advise you of your options, and suggest the best possible course of action for your particular situation.