Filing for bankruptcy can provide many benefits to Chattanooga residents in serious debt. Creating a bankruptcy petition may seem daunting at first, but doing so could ultimately restore your financial stability, social reputation, and peace of mind. A knowledgeable lawyer could explain how filing for bankruptcy could make your life better and help guide you through the steps of the process.
One of the main benefits of filing for bankruptcy is it can allow the debtor to completely discharge their debts and start over. In some bankruptcy cases, the debtor could be released from the legal obligation to pay off specific types of debts. This release is called a bankruptcy discharge and occurs in Chapter 7 cases.
Often, tax debts, student loan debts, and child and spousal support, cannot be discharged in bankruptcy, but most other debts are eligible. A nearby lawyer could help a person determine which debts could be discharged by filing for bankruptcy.
As soon as a person files bankruptcy, an automatic stay is imposed. This ensures that the debtor is protected from harassment by creditors trying to collect their debts. An automatic stay is a benefit of filing for bankruptcy that can give a debtor immediate relief and allow them to protect their property.
Additionally, if there have been garnishments or repossessions prior to the debtor filing for bankruptcy, they could be turned around so that the debtor could get their property back. For example, bankruptcy can help a debtor retain possession of their car if they need it to get to work and pay for their living expenses.
In bankruptcy law, exemptions can determine changes in the possession of a debtor’s property after filing. This is governed in some jurisdictions by state law and in others by both state and federal law. Federal law has its own exemptions that do not apply in Tennessee.
The debtor can file for bankruptcy for eight years, and while this gives them relief during that period, some debts still have to be paid. The bankruptcy trustee will usually sell the debtor’s valuable personal property so that the creditors can be paid, unless the debtor has no valuable assets. This is why a debtor can lose valuable property during a bankruptcy, and this is where exemptions may be utilized.
For example, Tennessee has a homestead exemption. If it is the debtor’s primary residence, a fairly large portion of the value of their home will be exempted, so they may be less likely to lose it. A local lawyer could further explain the eligibility for these exemptions which could benefit a debtor during their bankruptcy filing.
If you are facing severe debt and want to make a change in your financial situation, filing for bankruptcy may be your best option. A Chattanooga lawyer could explain the benefits of filing for bankruptcy, help you protect your property, and allow you to regain control over your finances. Call today to schedule a confidential consultation and learn more.