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Tennessee bankruptcy can feel like taking a leap of faith

For some Tennessee residents, mounting debt can seem like it is pushing them closer to the edge of a cliff. Sooner or later, most people see the looming prospect of filing for bankruptcy. For some, though, it requires too much of a leap of faith, and they continue to struggle, falling further behind. Those who file for bankruptcy, however, come to see it as the best way to find permanent debt relief.

In 2012, there were more than 1.2 million bankruptcy filings in the United States, so filing for bankruptcy is more common than many people realize. The purpose of a bankruptcy filing is to eliminate debts, while finding a way for the debtor to start over again financially. There are two common types of bankruptcy: Chapter 7 and Chapter 13.

In liquidation bankruptcy, as Chapter 7 is known, the debtor keeps important assets, but other property may be sold to pay all debts off. The debtor is allowed to keep pensions and other benefits.

A Chapter 13 filing provides a repayment plan that can last from 3 to 5 years, depending on what a bankruptcy court decides will work better. Manageable payments let the person pay-off debts, while keeping certain properties. As with Chapter 7, the court will appoint a trustee, and the debtor must go through credit counseling.

Despite their merits, these bankruptcy forms have their limitations. For one, neither spousal support nor child-support payments can be considered as debts and thus are exempt from any relief plan. Nonetheless, bankruptcy is a viable way of discharging debts and helping a person financially recover enough to start over again.

Source: Debt.org, "Bankruptcy," accessed on Oct. 19, 2014

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

Phone: 423-954-7180
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