Tennessee residents and others who are struggling to pay their debts may qualify for Chapter 7 bankruptcy. In such a proceeding, a debtor’s assets may be sold, and the money that a trustee is able to collect will be used to pay off some or all existing creditors. If there is not enough money to pay off a balance, whatever remains will likely be discharged. There are several criteria that must be met before an individual is allowed to file for liquidation bankruptcy.
First, a debtor cannot file for a personal Chapter 7 bankruptcy on behalf of an LLC, corporation or a partnership. Only individuals, debtors filing jointly with a spouse or those who are operating as sole proprietors may do so. Next, a debtor must show that his or her income is below the median in the state for a household of his or her size. This is referred to as the means test.
Those who fail the means test may be required to file for Chapter 13 bankruptcy. Debtors cannot file for Chapter 7 protection for eight years after receiving a discharge under this portion of the bankruptcy code. They must wait six years after a Chapter 13 discharge to file for a new liquidation bankruptcy. In addition, debtors generally cannot file for protection from creditors less than 180 days after a case has been dismissed.
Filing for bankruptcy may put an end to creditor phone calls or other collection activities. It may also allow a person to get rid of unsecured debts without losing property or making future payments to creditors. Debtors may benefit from hiring an attorney to help their cases. An attorney may describe additional potential benefits to declaring bankruptcy as well as how to meet credit counseling and other requirements.