Tennessee Bankruptcy Eligibility
Tennessee law states that an individual must reside in the state of
Tennessee for a minimum of six months before he or she can file for
bankruptcy through the Tennessee bankruptcy court. These six months
must be prior to a filing and not end after bankruptcy is complete.
Bankruptcy is a right to the American people, but the government has
set new guidelines for who is eligible for bankruptcy. Bankruptcy is
designed to help those who have met financial turmoil find relief from
their debts. Those who have suffered from a loss of employment, the
loss of an important client, a divorce settlement, or an illness
requiring hospitalization are usually those who qualify for bankruptcy.
Bankruptcy does not eliminate all debts, however. Only some kinds of
debts may be eliminated while other are always excluded. These
exclusions include the payment of child support, the payment of
alimony, the payment of fines, the payment of some taxes, any debts
that are not listed under the petition for bankruptcy, falsified loan
documents where the loan base is on false information, malicious and
willful harm that resulted in debts, government student loans, unpaid
liens, and unpaid mortgages.
Student loans may be eliminated if the bankruptcy court determines that
the loan causes unnecessary hardship to the individual.
Bankruptcy Effects on Credit
Bankruptcy filing may not directly affect current or future credit.
Credit is usually based on payment status and payments that are
submitted on time. Bankruptcy will however be present on a credit
records for up to ten years. New credit can be established following
bankruptcy as all the current debts are eliminated and new bill
payments can be made on time.
At times credit cards can be kept after bankruptcy. Other times credit
cards may be disapproved. It is recommend that instead of using credit
cards, and falling into previous habits, that individuals use cash or
debt cards for purchases they would otherwise have used a credit card.
The government requires that after bankruptcy completion that
individuals attend a financial management course where more advice is
Tennessee's Bankruptcy Chapters
Tennessee offers two different chapters of bankruptcy for eligible
consumers. Chapter Seven bankruptcy allows individuals to eliminate
their debts by liquidating their current property. Not all property is
eligible for liquidation nor are all types of property exempt from
Property can be kept if exempt, and non-exempt property can only be
kept if the property's value is paid to the assigned trustee. This
trustee, as appointed by the court, will use the liquidated funds to
pay off creditors. After six months the entire process will be
completed, and the individual will be debt-free.
Chapter Thirteen bankruptcy is the other option in Tennessee. This type
of bankruptcy allows individuals to pay off their own debts by using
their own personal income. Upon filing the court will evaluate the
individual's income, expenses, debts, and household. A payment plan
will then be calculated based on the extent of debt and the personal
income. No payment plan is to exceed five years.