What Chapter 7 Bankruptcy Means
The most common form of bankruptcy, Chapter 7, offers those who are eligible the opportunity to start over with a clean slate and get rid of most debts, including credit card bills, medical bills and past-due utility payments.
How Much Does It Cost?
A Chapter 7 Bankruptcy is $1200 for most consumer clients. This includes the filing fee paid to the court, fees for credit counseling classes as required by law and fees for our service. When you are self-employed, the costs can be somewhat higher, generally falling in the range of $1500 – $2000.
What You’re Allowed to Keep
As long as you are current on your home or vehicle, it is usually not a problem for you to keep these items. However, you must continue to submit payments. You cannot NOT pay for them and expect to keep them.
From the time you file for Chapter 7 bankruptcy to the time of discharge, the entire process will take approximately 6 months.
Chapter 7 Bankruptcy & Child Support
Child support obligations, alimony, student loans and criminal restitution are not dischargeable debts. In other words, if you file for Chapter 7 bankruptcy, you will still be responsible for those obligations.
Chapter 7 Bankruptcy & Personal Property
The laws permit you to keep most personal items. In Tennessee, you may keep $10,000 worth of personal belongings and, if you owe money on your vehicle, only the equity in that vehicle counts against the $10,000.00. Most financed vehicles have little or no equity. Of course, you must continue to make payments on a financed vehicle if you wish to keep it.
Married Couples & Personal Property
A married couple filing together may generally keep $20,000.00 in personal belongings. Qualified pensions and retirement accounts set up through your employer and qualified IRAs are protected by law, so if you do not cash them out before filing, you will not lose these funds.
Keeping Your Home
Tennessee state law permits you to keep your home depending on how much equity you have. Persons with minor children and those age 62 or older enjoy greater protection. If during your initial consultation we determine that you have too much equity in your home to protect it through Chapter 7 bankruptcy, we will discuss your options for filing for Chapter 13 bankruptcy. Chapter 13 will protect you from losing your home.
During your first meeting with our attorneys we will review in detail your individual situation and discuss in detail your personal and real property. We can then advise you how to best proceed. Remember, our first consultation is free for consumer (i.e. non-business) clients.
Chapter 7 Bankruptcy Trustee
The bankruptcy court will appoint a Chapter 7 trustee who reviews any and all bankruptcy paperwork prepared by our attorneys using the information provided.
Going to Court
Usually, you will attend one hearing known as a Meeting of Creditors. This hearing takes place approximately 30 days after filing for Chapter 7 bankruptcy protection. During this time, your Chapter 7 trustee will swear you in and ask you questions. Our office will prepare you for that hearing upon signing your bankruptcy paperwork.