Chapter 7 Bankruptcy
Knoxville, Tennessee Chapter 7 Bankruptcy Lawyer
What is Chapter 7 Bankruptcy
Chapter 7 Bankruptcy is what most people think of as bankruptcy. Chapter 7 discharges or gets rid off unsecured debt such as credit cards, personal loans, signature loans, finance companies, medical bills, old utility bills, debt associated with repossessions and foreclosures and liabilities that are a result of car wrecks or accidents. As long as a person does not have too much equity in a house or vehicle and they are current on monthly payments, the person filing bankruptcy can keep a house or vehicle. A debtor in bankruptcy can also choose to surrender a house or vehicle and walk away from the debt associated with the collateral without owing anything more on the house or car.
Some debts are typically not discharged in a Chapter 7, these include the following: Most student loans, child support and alimony, some taxes, criminal fines and penalties, liability associated with a DUI or intentional injury to a person or property, debt incurred by fraud, misrepresentation or embezzlement. There are other types of debts that are not discharged so it is a good idea to seek the advice of a knowledgeable bankruptcy attorney before a bankruptcy is filed.
Chapter 7 is available for both consumers and businesses. To find out if filing Chapter 7 bankruptcy is the right decision for you contact our Knoxville Bankruptcy Lawyer today!
Who is eligible to file a Chapter 7 Bankruptcy in Knoxville?
Chapter 7 bankruptcy is for the honest, but unfortunate, debtor. A debtor can receive a discharge in bankruptcy once every 8 years. In Knoxville a debtor cannot make a lot of money and be eligible to file a chapter 7. The Bankruptcy Court in Tennessee looks at the median income and the IRS living expense standards for your household size for the particular county where you live, such as Knox County, and then determines whether you make too much money to file for a chapter 7. A debtor filing a chapter 7 must show they cannot afford to pay their creditors after paying normal, reasonable living expenses in order to get rid of the debt.
What to expect in Chapter 7 Bankruptcy
When you and our attorneys make the decision that you need to file a Chapter 7 Bankruptcy, we give you a list of the documents needed to prepare your bankruptcy petition. Our office will obtain a credit report to help verify all of your creditors are listed and receive notice of your bankruptcy. Our Knoxville location has extended hours from 8:00 am until 8:00 pm to make it convenient to meet with our attorneys and staff to prepare your petition. A person in Knoxville desiring to file a chapter 7 bankruptcy must take a required credit counseling class prior to filing the bankruptcy. Bond, Botes & Lawson facilitates the class to make it simple to complete this class. Most of our clients in Knoxville prefer to take this class by phone or internet as opposed to taking the class in person, however credit counseling companies offer the course at various locations in Knoxville if you prefer to take the class in person. An attorney in our office will go over the bankruptcy petition with you prior to filing the legal document with the Bankruptcy Court.
Once your bankruptcy petition is filed with the U.S. Bankruptcy Court, you are protected from your creditors by an automatic stay the prohibits the creditor from taking any further action to collect the debt without permission of the Bankruptcy Judge. You will attend a Meeting of Creditors in the Bankruptcy Court in Knoxville about a month after the bankruptcy is filed. Unlike some bankruptcy attorneys, you will meet with the attorney who is going to attend the Meeting of Creditors with you and the attorney will prepare you for the meeting of creditors. In a chapter 7 bankruptcy, most clients receive a discharge about four months after filing the bankruptcy petition. After you receive your discharge saying you do not owe your creditors anymore, our office drafts letters for you to send to the credit reporting agencies to begin the process of repairing your credit.
Role of the Chapter 7 Bankruptcy Trustee
A Chapter 7 Trustee is appointed by the U.S. Trustee in Washington, D.C. to review your bankruptcy petition to make sure you are eligible for a discharge. In Knoxville, the Chapter 7 Trustee will be the person who swears you in to testify under oath and will question you at your meeting of creditors. The Chapter 7 Trustee has a duty to review your assets to make sure they are protected by Tennessee or the applicable exemption laws. If you have assets that are not protected, it is the job of the Chapter 7 Trustee to sell that asset in order to obtain funds to pay your creditors. The Chapter 7 Trustee also reviews your case to make sure you are eligible for a discharge.
What if you change your mind and want to do a Chapter 13?
Once a Chapter 7 bankruptcy is filed, if you decide you want to file a chapter 13, you must seek permission from the Bankruptcy Judge to change your case or convert your case to a Chapter 13. Converting a case to a Chapter 13 is not automatic and your creditors, the Chapter 7 Trustee or the U.S. Trustee’s office could argue that you should not be allowed to convert your case to a chapter 13. This is why is it is very important to have a knowledgeable bankruptcy attorney advise you from the beginning of the process on which bankruptcy chapter is best for you and your family.
What Laws make Tennessee Chapter 7 Bankruptcy Unique?
Although the Bankruptcy Code is a Federal law, each state has different laws that protect property for the residents of their state. Also each district in each state has its own local court rules. For instance, the Federal Homestead Law allows citizens of the United States to protect up to $250,000 of equity in a home, but most states, including Tennessee have opted out of the Federal Exemption Laws. This means a experience bankruptcy attorney must identify whether you must claim Tennessee exemption laws, Federal laws or another State’s laws.
In Tennessee if you have a minor child or legal custody of a minor child, you are allowed to protect more equity in your home, $25,000 for an individual and $50,000 for a married couple filing for bankruptcy. Also in Tennessee, if you are 62 years of age or older, you are able to protect $12,500 of equity in your home if you are an individual and $25,000 of equity in your home if you and your spouse are filing for bankruptcy and you both are 62 years or older.
Tennessee also recently changed their personal property exemptions so that an individual filing for bankruptcy can protect $10,000 of personal property such as equity in a vehicle, household goods, furniture, money and funds in a checking or savings account. A married couple filing for bankruptcy can protect $20,000 of personal property.
Tennessee also has unique fraudulent conveyance laws that are longer than the federal fraudulent transfer laws in the Bankruptcy Code. A Trustee in bankruptcy can seek to avoid a fraudulent conveyance using both the Tennessee state law or the Federal law.
Non Dischargeable Debts in Chapter 7 Bankruptcy
The following are types of debts that are typically not dischargeable in a Chpater 7 Bankruptcy:
(a) Most taxes, or other loans incurred to pay taxes. If you owe the IRS please let us know at your first meeting as some taxes can be discharged.
(b) Debts incurred for money, property, services, extension, renewed or refinancing of credit, obtained by:
(i) False pretenses, false representation or actual fraud;
(ii) Written statements, that were materially false as to your financial condition, upon which the creditor reasonably relied and where you intended to deceive. (i.e. lying on a credit application)
(c) Credit card purchases of $500.00 or more for luxury goods or services within 90 days of the filing of the petition or cash advances on a credit card aggregating more than $750.00.00 on or within 70 days of filing the petition or cash advances.
(d) Non-listed or non-scheduled debts or debts with insufficient addresses. Debts where the creditor sent you a letter or bill in the 90 days before you filed and you did not list that particular address in your petition.
(e) Fraud, embezzlement or larceny.
(f) Child support, alimony, or maintenance.
(g) Debt that is owed to a former spouse or child resulting from a divorce.
(h) Most student loans, tuition, debt related to educational expenses, educational benefit overpayments or loans paid in whole or in part by a governmental unit or non-profit.
(i) DUI or drug related judgments resulting in death or personal injury.
(j) Debt that has had its dischargeability determined to be non-dischargeable in another case.
(k) Criminal fines or restitution.
(l) Willful and malicious injury by the debtor to another entity or the property of another entity.
