Debtors can apply for multiple kinds of bankruptcy that are applicable to different situations. Chapter 7 bankruptcy is a discharge of debt and usually involves no-asset cases, which means the person filing does not have enough resources to pay off their debts. Some cases may involve an individual letting go of assets that have equity in them to pay their creditors.
Every federal bankruptcy court has local rules, including the Chattanooga court. These rules do not typically affect the bankruptcy itself, but it is important for attorneys to understand and follow them. If you need to discharge your debt, a Chattanooga Chapter 7 bankruptcy lawyer could guide you through each step of the process.
There is no specific amount of debt that qualifies a person for Chapter 7 bankruptcy. Generally, an individual would need to file for bankruptcy when there is no reasonable way for them to repay their debt without doing so.
Bankruptcy can be a good solution for people in severe debt because it stops activities like vehicle repossession, real estate foreclosures, or evictions. Chapter 7 bankruptcy in particular could completely eliminate most secured debt, though it does carry the risk of losing property. A local lawyer could further explain the benefits of filing for Chapter 7 bankruptcy and when to start that process.
Chapter 7 bankruptcy is different from Chapter 13 because it is typically more helpful to people without a steady income. Chapter 7 liquidates debt, while Chapter 13 reorganizes it and makes a plan for the debtor to pay it off with court supervision. Additionally, people who file for Chapter 13 bankruptcy may make too much, or they want to keep their homes or their cars. Chapter 13 cases also may remain open for years, while once a Chapter 7 case is resolved as soon as a person gets their discharge.
Before filing, a debtor must look at their income and determine whether or not it is going to stay the same or increase. This can be done at a credit counseling company. The company will contact the creditors and attempt to work out a lower amount of total debt. They may take a good share of the interest off the total debt and reduce the payments to a manageable level.
As part of the bankruptcy process, a debtor must go through a credit counseling course before filing and prove they are committed to learning to be self-disciplined with their spending.
It can be difficult and overwhelming to file for Chapter 7 bankruptcy on your own, but a qualified legal professional could increase your chances of getting a successful discharge. A Chattanooga Chapter 7 bankruptcy lawyer could guide you to resources that will help you manage your finances after the process is finished, though this will require commitment on your part as well. If you are struggling with severe debt and want to seek relief, call today to schedule a consultation and learn more about your options to regain financial stability.