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Understand the basics about how Chapter 7 bankruptcy works

David Sexton

There are many Tennessee residents who are facing difficult financial situations and who are looking for options. Some of these people will try to look for better paying jobs to earn more income in order to pay off their bills and debts. Others may turn to family members, asking for small monetary loans to get them through tough times. However, there are many individuals and families who have debt obligations that probably seem insurmountable. For those Tennessee residents, Chapter 7 bankruptcy might be the best option.

Anyone who is considering filing for bankruptcy protection should know the basics about how the process works. Chapter 7, in particular, can be a useful option to eliminate debt obligations, although not all debts will qualify and not all Tennessee residents will be eligible to pursue a bankruptcy filing under Chapter 7.

For starters, anyone who files for Chapter 7 bankruptcy will be facing a situation in which all of their assets and debts will be identified and listed. It is important to know that not all assets will be part of the bankruptcy proceedings, as some assets will be "exempt." However, for the assets that are included, those assets will be "liquidated" in order to create funds that can then be applied toward the person's outstanding debts. From there, once everything has been settled, remaining debt will be discharged.

Having debt discharged in this manner can obviously be a financial boom for anyone, but there are some "cons" to consider as well. The bankruptcy filing will stay on the person's credit record for several years, for example, making it harder to qualify for loans in the future. But, when considering pros and cons, Tennessee residents will want to have a full picture of their own unique financial situation.

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