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Bankruptcy basics for Tennessee residents

The struggling economy and unexpected life changes can bring troubles to even the most financially stable Tennessee resident. This can lead to seemingly insurmountable debts at times. However, residents in this kind of predicament do have a viable option, bankruptcy.

There are often social judgments placed on bankruptcy, but, in reality, this legal process can put a debt-plagued resident back on financial track. A resident can opt for a Chapter 7 filing, referred to as liquidation bankruptcy. This type of bankruptcy filing entails liquidating a certain portion of one's property, which is not covered by exemptions, to pay for the incurred debts. A court appointed trustee will be tasked with managing the sale of properties.

On the other hand, a Chapter 13 bankruptcy filing allows a resident to maintain his or her property. To pay for the debts, a resident should have a regular source of income. Debt payments will then be deducted from the income. However, repayment plans should be approved by the court. After doing so, such as the case in a Chapter 7 filing, a trustee will be tasked to manage the payments. The trustee will make sure that the resident abides by the repayment plan and the creditors will receive the allotted payments.

Residents should also realize that, although some debts can be discharged, or in a way "forgiven," there are others like alimony, state and federal taxes and child support that cannot be exempted. Also, a resident can re-affirm certain debts. This means a resident, instead of discharging a debt can repay it so he or she can maintain the property. This is common in debts involving homes, vehicles and even tools that are integral to resident's livelihood.

Filing for bankruptcy is a legal and honorable way to pay off debts. Chattanooga residents who wish to take the high road may consult with a bankruptcy law professional.

Source: CBS Local Boston, "Personal Bankruptcy, The Basics," Jan. 6, 2014

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

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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