brand brand
Helping good people through bad times

Chattanooga Bankruptcy Law Blog

Information about payments under Chapter 13 bankruptcy

Once a Tennessee debtor realizes that bankruptcy is the only option and Chapter 13 is the optimal choice, there will be other issues that must be fully understood as part of the process. Adhering to the Chapter 13 plan is a key to getting debt relief and a fresh financial start, but debtors might be concerned about how much they must pay back and what will happen if they fail to keep up with the payments. Having information about these issues is crucial to having a successful outcome.

Chapter 13 is a repayment plan bankruptcy in which the payments will be made within three-to-five years, depending on the situation. With Chapter 13, some debts must be fully paid back. These are referred to as "priority debts." They are viewed as more important than others and will be handled first. Child support and taxes fall into this category. Secured debts will be part of the plan if the debtor has fallen behind in them. That includes a home or a car. It must be shown in the repayment plan that all disposable income after the priority debts is going to unsecured debt. Those without disposable income might not have to make those payments if there is a good faith effort to pay them.

A lawyer can help with the bankruptcy means test

Tennessee debtors worried about their financial future may feel overwhelmed by financial challenges, but bankruptcy may be an option. But, getting over the mental hurdles of bankruptcy can be hard, even though it is a time-tested and legal debt relief solution. Having legal assistance to walk the person through the process is essential, like understanding the means test.

The means test does not exclude people from filing for bankruptcy. It is a method to determine whether it would be better for the debtor to file for Chapter 7 or Chapter 13 bankruptcy. These are the chapters that are most commonly used by individuals.

Should I consider debt relief instead of bankruptcy?

When a Tennessean is confronted with overwhelming debt, it is not only a financial problem, but a personal problem as well. People can experience stress, find themselves unable to sleep, have health concerns and emotional problems because of financial challenges. Many are fearful of bankruptcy due to the stigma that many associate it with. Some will take the step of considering debt negotiation to eliminate debt. A debt negotiation program (DNP) is different from other alternatives and might be alluring to those who associate bankruptcy with shunning responsibility. Understanding the assertions that these companies make and if it is realistic is vital to deciding on the next step.

A DNP -- also called debt settlement companies -- will frequently promote themselves as being able to slash a person's debt in half by negotiating with the creditors. These programs can be costly and often base their fees on the percentage of the debt they have negotiated down. Debtors who believe some companies' claims as to how the debt settlement will have a negligible effect on their credit score can be disappointed with the result, if they are even to get the debt reduced at all.

What property is exempt when one files for Chapter 13?

Tennesseans who are drowning in debt and desperate to make a fresh financial start will often see Chapter 13 bankruptcy as a financial lifeline. Chapter 13 is different from Chapter 7 in that there is no liquidation, and there will be a payment plan for three to five years.

With Chapter 13, there is the opportunity for the debtor to retain certain properties, like a car or a home. With Chapter 7, most items of value will be sold to repay the creditors.

A Chapter 7 bankruptcy can be revoked in some cases

When a Tennessean takes the step to file for Chapter 7 bankruptcy, it is done with the expectation that they will receive a discharge for their debts and they can move forward free of their financial challenges. However, it is not a guarantee that filing for Chapter 7 will lead to the discharge with no subsequent issues. The reality is that the discharge can be revoked. Understanding when this can happen and other possible sticking points to a bankruptcy is a solid strategy to avoiding them.

The bankruptcy court has the right to revoke the discharge if the situation calls for it. Examples are when the trustee, the creditor or the U.S. trustee requests that there be a revocation due to allegations that the debtor received it under fraudulent circumstances. It can also be done if the debtor did not disclose the acquisition or the entitlement to property that would be considered property of the bankruptcy estate.

Study shows large portion of Americans with credit card debt

Tennesseans who are in debt are in that position for a variety of reasons. In many cases, they will think they are alone. But, it might be beneficial to understand the statistics of debt -- particularly credit card debt -- is affecting a significant number of Americans. When the debts have become overwhelming, people must also be aware that they have alternatives, such as personal bankruptcy and other forms of debt relief to improve their situation.

According to a study from, about 43 percent of adults have credit card debt that has been in place for at least two years. That comes to approximately 29 million people. More than half have had the debt for at least five years. This is a growing issue across the nation and has led to the belief that a large portion of debtors will not be able to pay it back. A greater number of people have accrued credit card debt than they have debt from mortgages.

How much is the homestead exemption under Chapter 7?

Tennessee debtors feeling overwhelmed by what they owe to creditors and other entities might not know what to do about their debts. Chapter 7 bankruptcy is often a viable option, but certain concerns will preclude some debtors from moving forward. One issue is what property is exempt, which itemps a person can keep. Knowing what falls into the exempt will provide a foundation as to whether Chapter 7 is the preferable option.

The homestead exemption is in place so the debtor can retain their home, even with a Chapter 7 bankruptcy. The amount that can be protected under the homestead exemption depends on the state in which the filing is done. In Tennessee, the person can designate as much as $5,000 in homestead property if it is an individual debtor and $7,500 if it is more than one.

Bankruptcy is often preferable to debt settlement

When confronted with financial challenges and limited strategies to get out, many Tennessee debtors will boil their choices down to debt settlement or bankruptcy. Debt settlement companies make a great show of their skills and assert that it is better than bankruptcy. Unfortunately, desperate people may believe those assertions. However, even though the increased regulation and oversight has improved the industry, it might not be the best alternative for most people.

In the past, debt settlement companies rarely got the creditors to reduce their demands. But, even when they did, a forgiven debt does not mean that the person will not owe anything on that forgiven debt because they may still owe taxes on it.

Background on bankruptcy with creditors and employment

Tennesseans who are thinking about filing for bankruptcy due to financial challenges will undoubtedly consider the option due to the allure of debt relief and moving forward with his or her life. Whether it is a Chapter 7 bankruptcy, a Chapter 13 bankruptcy or some other chapter, there are certain factors that must be understood even after the case is completed. Two that frequently arise are if the creditor continues trying to collect on a discharged debt after the case has been completed and how a bankruptcy affects employment at a current job.

Creditors are not supposed to try and collect on a discharged debt. If a creditor does try to do this, the debtor has the right to file a motion and report the action requesting that the situation be handled. The court will frequently do this to make certain that there has not be a violation of the discharge. Once a debtor has been granted a discharge, there is a permanent statutory injunction that is meant to stop creditors from acting to collect a debt. That includes a legal filing to collect. The creditor can be sanctioned for a violation. Generally, that will result in a fine for the creditor.

The right approach to filing for bankruptcy and rebuilding credit

Financial challenges are often cited as the biggest reasons why Tennessee residents decide to consider filing for bankruptcy. A concern that many have, however, is how the process will negatively affect their credit and what they can do after the bankruptcy is completed to rebuild their credit. Fortunately, there are ways to get back on stronger financial ground through bankruptcy and to rebuild credit. Having legal assistance is essential to this process.

Credit scores are used when seeking a mortgage, trying to buy an automobile, even when trying to get an apartment or a job. Although bankruptcy will impact credit scores in the immediate aftermath of the legal case, a person who has received a discharge of their debts with bankruptcy can act quickly in rebuilding credit. There are various steps a person can take when they are trying to get their credit back in good shape.

Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-954-7180
Phone: 423-624-4002
Fax: 423-624-0509
Map & Directions