What Is The Automatic Stay? | How To File Bankruptcy in Tennessee and Stop Collections
How to File Bankruptcy in Tennessee
Being deep in debt can feel insurmountable, but filing for bankruptcy might offer a fresh start. In Tennessee and all other states, filing for bankruptcy is a complicated process, so it’s best to get help from an attorney. They can help you figure out which type of bankruptcy is your best option and increase your chance of completing the process successfully. In most cases, you’ll choose between Chapter 7 and Chapter 13, which both have advantages and disadvantages. To take the first steps towards financial relief, file your petition and other forms, complete credit and debt education courses, and attend 1 to 2 required hearings at your judicial district’s bankruptcy court.
Beginning the Bankruptcy Process
File for bankruptcy only as a last resort.Being deep in debt can feel overwhelming, but bankruptcy could offer you a fresh start. Just keep in mind that your credit score will take a significant hit, and a record will remain on your credit report for 7 to 10 years. Before filing for bankruptcy, look into other options, such as debt consolidation or renegotiating your debt with your creditors.
Obtain a bankruptcy attorney.Filing for bankruptcy is complicated, and hiring an attorney can make the process less confusing. A bankruptcy attorney will help you determine which type of bankruptcy is right for you, correctly file paperwork, and handle other details. If necessary, you can pay legal fees in installments to make legal counsel more affordable.
- While you can file for bankruptcy without a lawyer, it’s much better to seek legal counsel. For instance, most cases of Chapter 13 bankruptcy filed without an attorney are dismissed.
- Search for an attorney online or look for one on the Tennessee Bar Association's website: . Look for client reviews online and check listings on the Better Business Bureau.
Figure out if your debts are eligible for discharge.Create a spreadsheet that totals your debts by type. For example, make a category that lists your credit card debt, another for student loans, and so on. Consult your attorney to ensure that you’d actually benefit from filing for bankruptcy.
Choose Chapter 7 bankruptcy if you qualify and don’t need to protect assets.Chapter 7, or liquidation, bankruptcy, is when a trustee of the court sells your assets in order to pay off and discharge your debts. Some assets, such as a car you use for work or your wedding ring, are exempt from liquidation. Your income must be below your state’s median in order to file for Chapter 7 bankruptcy.
- The median income in Tennessee for a single earner is ,759.Check the Tennessee bankruptcy court's website for full guidelines: .
- When choosing which type of bankruptcy to file, discuss your assets, income, and other determining factors with your attorney.
File for Chapter 13 bankruptcy if you want to protect your assets.If you earn too much income to qualify for Chapter 7 or want to protect secondary assets, Chapter 13 is your best option. In Chapter 13 bankruptcy, you’ll negotiate a repayment plan over a 3- to 5-year term. Your assets are not liquidated, so you won’t lose a second car, home, expensive electronics, or other valuables.
Locate your judicial district’s bankruptcy court.There are 3 judicial districts in Tennessee. You or your attorney will file paperwork with your local district’s bankruptcy court, and you’ll need to attend hearings at that location. Find your local bankruptcy court here: .
Complete credit counseling before filing.All debtors filing for bankruptcy must complete a credit counseling course before filing for bankruptcy. You can complete a course online, over the phone, or in person. They cost around , but if you make less than 150 percent of the poverty level, you can apply for a reduced rate or to have course fees waived.
- Poverty level depends on household size. As of 2019, the poverty level for an individual is ,140. It's ,460 for a 2-member household; ,780 for a 3-member household, and ,100 for a 4-member household. See the full list and check for updated values here: .
- Reduced rate and fee waiver applications vary by agency, so work with your specific agency if you need help paying for a course.
- Find approved credit counseling agencies in Tennessee here: .
Filing for Chapter 7 Bankruptcy
File a petition for bankruptcy and schedule forms.You’ll need to submit a packet of forms (along with your credit counseling certificate of completion) with your local bankruptcy court. These include a petition for bankruptcy and schedules that list your income, living expenses, and debts. If you have an attorney, they’ll file them with the court for you. If you don’t, you’ll need to bring the completed forms to the court.
- You can find all required bankruptcy forms and instructions for filing here: .
Pay filing fees or request a waiver.As of January 2019, it costs 5 to file for Chapter 7 bankruptcy. Typically, you’ll pay filing fees when you submit your petition and schedule forms. If you make less than 150 percent of the poverty level, you can ask the court for a fee waiver or installment plan.
- Check current poverty guidelines here: .
Attend a meeting of creditors.When you file for bankruptcy, a trustee of the court will be assigned to your case. Within 21 to 40 days, they’ll schedule a meeting of creditors, which you’re required to attend. This gives the trustee and creditors the opportunity to ask you questions about your income, expenses, and debt.
- Bring your mortgage record, car titles, property deeds, bank statements, tax returns, pay stubs, and other documents required by the trustee.
- Usually, only home or auto loan lenders attend the meeting. For most people, the meeting of creditors is quick and usually isn't stressful.
- The trustee will ensure that you’re aware of the effects of filing for bankruptcy, such as impacts on your credit score. They might also establish any debts that you’ll need to continue to pay off, or reaffirm.
Reaffirm debts, if necessary.Debts that won’t be discharged, such as a mortgage, car loan, or child support, must be reaffirmed. This means that you agree to pay off these debts in full or at a rate set by the trustee. If necessary, you’ll sign a reaffirmation agreement before your debts are discharged.
Complete a debtor education course after filing.After filing for bankruptcy and before your debts are discharged, you’ll need to complete a debtor education course. Like the credit counseling course, you’ll complete it online, over the phone or in person. You can request a lower rate or fee waiver if you can’t afford to pay for the course.
- Find debt education agencies in Tennessee here: .
Allow 60 to 90 days for a notice of discharge.Within 60 to 90 days of the creditors meeting, you’ll receive notification that your debts were discharged or that your case was dismissed. Dismissals are rare; over 99 percent of Chapter 7 bankruptcy filings are successful. With your debts discharged, you can now breathe a sigh of relief and start getting back on financial track.
- Be sure to keep your notice of discharge in your records.
Filing for Chapter 13 Bankruptcy
File your petition and schedule forms.As is the case with Chapter 7 bankruptcy, you or your attorney will submit your forms at your local bankruptcy court. In addition to the petition for bankruptcy, you’ll submit schedules that report your income, living expenses, and total debts.
- Find all required bankruptcy forms and instructions for filing here: .
Pay the filing fee or set up an installment plan.Case filing fees for Chapter 13 bankruptcy total 0. Unlike Chapter 7 bankruptcy, you cannot request a fee waiver. However, you can ask the court to pay the fees in up to 4 installments.
File a repayment plan within 14 days of submitting your petition.You and your attorney will use Chapter 13 bankruptcy forms to calculate your total income and living expenses. All remaining disposable income after living expenses goes to repaying your debts in biweekly or monthly installments for 3 to 5 years. You’ll fill out a form that proposes your repayment plan and submit it to the court.
- Use this form to calculate your repayment plan: .
Attend the meeting of creditors.The trustee assigned to your case will schedule a creditors meeting 21 to 40 days after you file for bankruptcy, which you must attend. As is the case with Chapter 7 bankruptcy, the meeting allows the trustee and your creditors to ask you questions about your financial situation.
- Bring your mortgage record, car titles, property deeds, bank statements, tax returns, pay stubs, and other documents required by the trustee to the meeting.
- As long as your petition and payment plan are completed accurately, you shouldn't run into any problems at the meeting. Your attorney will help you ensure you file your petition and plan properly.
Begin making payments within 30 days of filing for bankruptcy.Whether or not the court approves your repayment plan, you’ll need to start making payments to your trustee. The trustee will release payments to creditors after the plan is approved by the court. Thereafter, you’ll most likely make regular payments to the trustee through automatic payroll deductions.
Attend the confirmation hearing.Unlike Chapter 7 bankruptcy, Chapter 13 involves 2 hearings. The confirmation hearing is when the court approves or modifies the repayment plan or dismisses the case. It takes place within 45 days of the creditors meeting, and your case is automatically dismissed if you fail to attend.
- Chapter 13 bankruptcies aren't as successful as Chapter 7 bankruptcies. About half of Chapter 13 cases are dismissed, and 12 percent of cases are converted to another type of bankruptcy.
Complete a debtor education course after filing.After filing for bankruptcy, you’ll need to complete a debtor education course. Upon successfully completing the course, you’ll be eligible for discharge once you complete your 3- to 5-year repayment plan.
- Locate debtor education agencies in Tennessee here: .
- If you make less than 150 percent of the poverty level, you can request a reduced rate or fee waiver. Check poverty guidelines here: .
Video: What Should I Know About Filing Bankruptcy in Tennessee or Mississippi?
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