Understanding bankruptcy may help Tennessee residents determine whether taking such action could work in their favor. Many parties may avoid this option due to thinking it does more damage than good, but the process could be beneficial for qualifying individuals. The two most common types of personal bankruptcy are Chapter 7 and Chapter 13, and each type has its own proceedings.
Chapter 7 is the more common of the two filings and involves the liquidation of assets. Many individuals filing for this type of bankruptcy likely have few assets and limited income. As a result, they do not believe that they have the ability to effectively pay back creditors and eliminate their debt. Through this filing, assets will be liquidated in order to pay back certain debts while other debts may be discharged entirely.
Chapter 13 is often filed by individuals who have a stable income. This filing involves a court-approved repayment plan that allows individuals to make monthly payments over a time period of five or fewer years. Debt balances are often reduced by a considerable amount -- if not discharged totally -- in order to make the payments more manageable.
Simply becoming more knowledgeable on a topic can often make it seem less daunting. Many individuals who learn more about bankruptcy may find that it could potentially help their financial situation. If Tennessee residents would like more information on Chapter 7 and/or Chapter 13 bankruptcy, they may wish to consider discussing their cases with experienced bankruptcy attorneys in order to gain personalized insight into how their situations could be affected.
Source: lawndalenews.com, "Bankruptcy, What's It All About?", March 24, 2016