One of the most powerful provisions of the United States Bankruptcy Code is the automatic stay -- the provision that prevents creditors from attempting to collect a debt from the debtor. For anyone in Tennessee who files a bankruptcy petition, the automatic stay will bring most collection actions to an immediate stop. However, not every action against the debtor will be stopped. As such, for anyone contemplating bankruptcy, the power and limits of the automatic stay should be completely understood.
When most Tennessee residents think about filing for bankruptcy, they are probably thinking about Chapter 7 bankruptcy, which is commonly known as "liquidation" bankruptcy. In a Chapter 7 bankruptcy, the bankruptcy filer's assets are sold off, with some exemptions, and the proceeds are used to pay off outstanding debt. However, there is another option for residents to consider: Chapter 13 bankruptcy.
When a Tennessee business faces the possibility of filing a bankruptcy petition, one of the first questions that is asked is whether to seek reorganization under Chapter 11 or dissolution under Chapter 7. If the business chooses, the former, its executives and advisors will be required to answer a number of questions about the value of the company and its assets. Understanding these questions and how to answer them is a necessary prerequisite to choosing between Chapter 11 and Chapter 7 business bankruptcy.
Most people in Tennessee who seek to discharge their debts in a Chapter 7 bankruptcy proceeding assume that their debts will be wiped out at the end of the process. This expectation, while understandable, does not represent the law that governs Chapter 7 discharges. Creditors have the right to object to a discharge of certain debts on any of several grounds spelled out in the Bankruptcy Code.
Personal bankruptcy often carries a heavy stigma among people in Bradley County. Bankruptcy is often viewed as a form of cheating, that is, people use it to escape their legal obligations and for no other reasons. This view is not correct. Financial problems can arise from many causes that are beyond the control of an individual. A serious illness or injury might exhaust financial resources. Likewise, the loss of a job can have a ruinous impact on a person's ability to manage debt. The federal bankruptcy law is intended to alleviate these problems and help individuals regain their financial health.