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What do you need to know about Chapter 7 bankruptcy?

David Sexton

Most of our readers in Tennessee know the basics about bankruptcy: it helps consumers and businesses address overwhelming debt obligations. But, there are different types of bankruptcy filings that an individual can pursue. Most commonly, an individual who is exploring bankruptcy will likely be presented with the option to pursue Chapter 7 bankruptcy first. So, what do you need to know about Chapter 7 bankruptcy?

Well, for starters, Chapter 7 bankruptcy is more commonly known as "liquidation" bankruptcy. This is because under this chapter of bankruptcy filings a person will list all non-exempt assets they own, as well as all applicable debts owed, and then the bankruptcy trustee will sell off the assets with the funds gained being used to pay down debts. Any assets that are exempt under the applicable bankruptcy laws are kept by the filer.

However, as a recent article noted, there are some requirements that must be met before a Tennessee resident can file a Chapter 7 bankruptcy action. There is a "means test," which means that if a person makes too much income that individual may not qualify for Chapter 7 bankruptcy. There is also credit counseling that must be completed, which allows a potential bankruptcy filer to become aware of all possible options for addressing debt, including bankruptcy.

In short, Chapter 7 bankruptcy can be relatively straightforward for those who qualify. But, Tennessee residents who are considering bankruptcy to address their debt burdens will want to explore all bankruptcy options to see what option is best for their own unique circumstances.

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