Filing for bankruptcy can be a very stressful and emotional choice. The legal jargon can be confusing for someone going through difficult financial times. At Clark & Washington, we want to make it as easy for you as we can. This begins with answering your questions in simple and easy to understand ways. To help you out, we have provided the answers to our most frequently asked questions below. However, if you still have questions or concerns, please do not hesitate to call us today.
If you are considering filing for bankruptcy in Tennessee, the timeline depends upon which Chapter you choose. In Chapter 7 cases, it generally takes three to four months from the date your case is filed until you get your discharge. Chapter 13 cases, however, involve repayment plans that typically last between three and five years.
But the act of filing for either Chapter 7 or Chapter 13 can be done in a short period of time. In fact, in appropriate circumstances, we can file your case the day you first consult with us.
As a regular part of our consultation, we will describe how Chapter 7 and Chapter 13 apply to your situation and give you all the information you need to make an informed decision about which choice is best for you.
No, you don’t need to know the legal terms as that’s our job as your attorneys. However, the more you understand how your case will work, the less stressful your Tennessee bankruptcy experience will be. Familiarity with some of the basic terms has proven to be very beneficial to our clients:
Automatic Stay: An injunction under federal law that goes into place when your bankruptcy case is filed; it prohibits most debt collection activities against your property and you.
Bankruptcy: Types of debt relief provided under federal law (Title XI of the United States Code)
Chapter 7 (a/k/a Straight Bankruptcy): People choose Chapter 7 when they have basic property and modest income.
Chapter 13 (a/k/a Wage Earner’s Plan): People choose Chapter 13 when they have assets they would lose in Chapter 7; debts they cannot discharge in Chapter 7; or too much income to qualify for Chapter 7.
Foreclosure: A legal process that allows a mortgage holder to remove the debtor’s ownership interests in real property.
Liquidation: The sale of a debtor’s nonexempt assets.
Repossession: A term used when a financial institution, like a bank or loan company, takes back collateral that you no longer can afford to make payments on.
Wage Garnishment: A court order requiring a person’s employer to withhold a portion of their wages and pay if into the court to satisfy the claim of a judgment creditor.
Don’t let unfamiliar legal terms deter you from getting any answers you need. You only have to ask, and we’ll make sure you have a clear understanding of the situation.
As stated, the legal jargon used in bankruptcy cases can be hard to understand however it is important to know a few of the terms.
Bankruptcy: Legal status of an individual or a company that can no longer repay its debts.
Chapter 7: File for this when you have basic property and only enough money to pay for basic needs.
Chapter 13: File for this when you have large amounts of assets and you would like to keep them after the case is settled.
Repossessions: A term used when a financial institution, like a bank or loan company, taking back an object that you can no longer make payments on.
Foreclosures: A process that takes place when a homeowner can no longer make payments on their home and must give up all homeowner rights.
Wage Garnishments: A legal procedure where a person’s earnings are withheld by an employer because is required by a court order.
Liquidation: Sale of all of debtor’s assets with proceeds going back to debtors.
Do not let these terms and other jargon deter you from getting the answers you want.
Chapter 7 is often called “liquidation” bankruptcy; it is designed to wipe out most unsecured debts (like credit cards and medical bills) quickly, usually within 3 to 6 months. Chapter 13 is a “reorganization” or repayment plan that allows you to catch up on missed mortgage or car payments over a 3-to-5-year period while keeping your assets.
Yes, in most cases. Tennessee has specific “exemptions” that protect your equity in your home and vehicle. Under Chapter 13, you can create a plan to pay off arrears and keep your property. In Chapter 7, as long as your equity doesn’t exceed the state’s limits and you stay current on payments, you can typically keep them.
Immediately. Once Clark & Washington files your petition, an “Automatic Stay” goes into effect. This legally prohibits creditors from calling you, sending collection letters, suing you, or garnishing your wages. If a creditor contacts you after we file, they are in violation of federal law.
Eligibility is determined by the “Means Test,” which compares your household income to the median income for a family of your size in Tennessee. If your income is below the median, you usually qualify. If it is higher, we can perform a secondary calculation of your expenses to see if Chapter 7 is still an option.
For residents of Chattanooga and surrounding counties (like Hamilton, Bradley, or Marion), your case will be handled by the U.S. Bankruptcy Court for the Eastern District of Tennessee, located right here in downtown Chattanooga. Currently, many “341 Meetings” (creditor meetings) are being held via phone or video conference.
Yes. Filing for bankruptcy, specifically Chapter 13, stops foreclosure proceedings and vehicle repossessions instantly. It gives you the legal framework to pay back the “arrears” (overdue payments) over time while you continue making your regular monthly payments.
Not necessarily. In Tennessee, you can file individually or jointly. If most of the debt is in your name only, your spouse may not need to file. However, if you have significant joint debt, the creditor can still pursue the non-filing spouse for payment. We can help you determine the best strategy for your household.
Tax debt can sometimes be discharged if it is older than three years and meets specific IRS criteria. Student loans are generally not dischargeable unless you can prove “undue hardship,” which is a high legal bar. However, Chapter 13 can provide a way to manage these payments more affordably.
Bankruptcy is all we do. Our Chattanooga legal team understands the local court system and the specific financial challenges Tennessee residents face. We offer free initial consultations, affordable payment plans, and a high level of personal communication to ensure you get the fresh start you deserve.
Do you still have questions about claiming bankruptcy in TN or do you find yourself wondering if it’s the right option for you?
Our experienced team is here to provide clear answers and personalized support. Call us or book online to get started with a free bankruptcy consultation today!
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