Filing for bankruptcy is a major decision, but for many Tennessee residents struggling with debt, Chapter 7 bankruptcy can offer a much-needed financial reset. At Kenneth C. Rannick, P.C., we help individuals in the Chattanooga area navigate the bankruptcy process and determine if Chapter 7 is the right solution.

What Is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is often referred to as “liquidation bankruptcy.” It allows qualified individuals to discharge most unsecured debts—like credit cards, medical bills, and personal loans—without requiring repayment. In exchange, certain non-exempt assets may be sold by a court-appointed trustee to pay creditors. However, many people are able to keep most or all of their property due to Tennessee’s generous exemption laws.

The Means Test: Your Key to Qualification

To file for Chapter 7 in Tennessee, you must pass the Chapter 7 Means Test, which evaluates your income and expenses to determine if you truly can’t afford to pay your debts.

• Step 1: Compare Your Income
  Your household income is compared to the median income for a Tennessee household of the same size. If your income is below the median, you automatically qualify.
• Step 2: Deduct Expenses
  If your income is above the median, the second step involves subtracting allowable living expenses (e.g., rent, utilities, food) from your income. If there’s not enough left over to pay a portion of your unsecured debts, you may still qualify.

Other Chapter 7 Requirements

Beyond the Means Test, you must meet several additional requirements:

• Credit Counseling: You must complete a credit counseling course from an approved provider within 180 days before filing.
• No Recent Bankruptcy: You cannot have received a Chapter 7 discharge in the past 8 years or a Chapter 13 discharge in the past 6 years.
• Honesty in Reporting: You must disclose all assets, debts, income, and financial history. Concealing information can lead to dismissal of your case or even criminal charges.

Property You Can Keep in Tennessee

Tennessee allows exemptions that protect certain property from being sold in bankruptcy. These may include:

• A portion of your home equity (homestead exemption)
• Vehicle equity
• Household goods and clothing
• Pensions and retirement accounts
• Public benefits like Social Security or unemployment

A Chattanooga bankruptcy attorney can help you maximize these exemptions.

How Kenneth C. Rannick, P.C. Can Help

Understanding bankruptcy law is challenging. At Kenneth C. Rannick, P.C., we guide Chattanooga residents through every step of the Chapter 7 process—from determining eligibility to protecting your assets and ensuring compliance with all filing requirements.

We’re here to help you make informed decisions and take back control of your financial future.