Tennessee Law on Chapter 7 Bankruptcy
If you have outstanding debts, few assets and no means to repay what you owe, a Chapter 7 bankruptcy may be the best option for resolving your financial dilemma. While the U.S. Bankruptcy Code establishes the basic guidelines for Chapter 7, each state's bankruptcy court may enact its own local rules for filing. If you're a resident of Tennessee who's planning on declaring Chapter 7, you should know what the process entails before filing.
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Means Test
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Each state requires debtors to successfully pass a means test before filing Chapter 7 bankruptcy. The means test measures your median income for the previous six months against the median income for your household size. Median income guidelines are established by the U.S. Trustee program. In Tennessee, a single filer is allowed a median income of no more than $37,598 as of 2010. The limit increases to $63,999 for a family of four.
Filing
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Chapter 7 petitions may be filed in the Eastern, Western or Middle district bankruptcy courts, depending on which area of Tennessee you live in. As of 2010, the required filing fee is $299. In Tennessee, you may petition the court to waive these fees or pay them in installments. You are required to complete approved credit counseling 180 days before filing. The state of Tennessee does not require you to have legal counsel to file Chapter 7.
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Process
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Approximately 14 days after you file, you are required to submit a complete list of your assets and liabilities to the court along with a statement of your financial affairs. Within 45 days of filing, you are required to complete a course in financial management. The court will schedule a meeting of creditors approximately 30 to 50 days after filing. Failure to attend this meeting can result in a dismissal of your bankruptcy petition. If no new issues are raised, you can typically expect your case to be discharged within 60 days.
Exemptions
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Every state allows Chapter 7 debtors to exempt a certain amount of their assets from seizure. As of 2010, you are allowed a homestead exemption of up to $7,500 if you are under age 62. The limit increases to $25,000 if you have at least one minor dependent or if you are over age 62. You are also allowed to exempt up to $10,000 in personal property, $1,900 in tools of the trade and proceeds from retirement, health savings, life insurance or education savings accounts.
Considerations
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Chapter 7 bankruptcy can only be used to eliminate certain kinds of debt, such as credit cards or unpaid medical bills. If you owe back taxes, child support, alimony, student loans or government fines these cannot be discharged through Chapter 7. Chapter 7 can remain on your credit score for up to 10 years, potentially making it more difficult to purchase a car or home, obtain new credit or find employment.
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References
- United States Bankruptcy Court Eastern District of Tennessee: Required Lists, Schedules, Statements and Fees
- Lawyers: Bankruptcy in Tennessee
- U.S. Trustee Program: Median Income Table
- United States Bankruptcy Court Eastern District of Tennessee: Local Ruless
- Legal Consumer: Tennessee Bankruptcy Exemptions
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