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July 2019 Archives

Can personal bankruptcy protect my home from foreclosure?

Although the economy seems to have rebounded following the Great Recession, there are still many people in Tennessee who are living paycheck to paycheck. A medical emergency, a car repair or a lost job may be all it takes to throw a person into financial catastrophe. Struggling under debts you have no means of repaying is very stressful. And, for many people, one of the biggest hurdles they face is how to pay their mortgage.

How a Chapter 13 bankruptcy can help with credit card debt

Most people in Eastern Tennessee who are trying to decide whether to file a bankruptcy petition understand the fundamental difference between Chapters 7 and 13. A Chapter 7 filing usually results in the discharge of all of a person's unsecured debt, whereas a Chapter 13 filing usually results in a plan of reorganization that reduces the amount owed on certain debts but does not discharge the basic obligation to repay the debt. Many would-be Chapter 7 filers cannot pass the so-called "means test" that is the gateway to Chapter 7 because they earn too much money. These debtors must turn to Chapter 13 to deal with their credit card debt.

Understanding the Chapter 7 means test in Tennessee

In our last post, we compared the two principal bankruptcy provisions used in personal bankruptcies, Chapter 7 and Chapter 13 of the federal Bankruptcy Code. Debtors usually prefer filing under Chapter 7 because it can result in the discharge of virtually all of the person's debts, while Chapters 11 and 13 will produce plans in which the bankrupt's debts are merely reorganized for payment over the next three or five years. Anyone who wants to utilize the discharge feature of Chapter 7 should understand the so-called means test.

The important differences between Chapter 7 and Chapter 13

People in Eastern Tennessee who are contemplating filing for bankruptcy know that they must choose between Chapter 7 or Chapter 13 of the Bankruptcy Code, but they may be unsure of the differences in the two procedures. A complete explanation of the differences would not fit in this blog, but knowledge of the important differences between Chapter 7 and Chapter 13 can lead to a reasoned choice.

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