Clark and Washington logo

Understanding Chapter 7

Understanding Chapter 7 Bankruptcy in Tennessee

Although there are many types of bankruptcy, Chapter 7 bankruptcy will be the simplest and most straightforward type of debt relief for most people. Known as “Chapter 7” because its rules are contained in chapter 7 of the federal Bankruptcy Code, Chapter 7 allows an individual or business to walk away from most debts and start over.

You can think of Chapter 7 as a kind of trade. In exchange for a discharge of your debts, you give the Chapter 7 trustee any property you own that is not considered “exempt” under the bankruptcy laws. The good news here - the exemption laws permit you to keep most personal items. You may discover that you give up none of your property, while you walk away from years of credit card, medical and other debt.

The Chapter 7 trustee is appointed by your bankruptcy judge and will look closely at your bankruptcy schedules. If the trustee finds any assets, he will take possession of that property, conduct an auction sale and distribute the proceeds to your creditors.

In Most Chapter 7 Cases, You Lose Nothing....But Your Debt!

Statistically, however, most Chapter 7 cases are “no asset” cases meaning that there will be no property for the Chapter 7 trustee to seize and sell. Assets that are protected from the trustee’s reach include most clothes, household goods, retirement money, and jewelry. In most cases, you can also exempt your car and even the equity in your house.

Exemption analysis and planning are an important part of Clark & Washington’s evaluation of your case. Make an appointment to learn more about the Tennessee exemption law and how we use that law to protect as much of your property as the law allows.
  • Chapter 7 works best when you do not own a lot of real or personal property and when your income falls below the average household income for a family the same size as yours in Tennessee.
  • Chapter 7 works best when you want to “start over” and you are willing to walk away from hard assets that cannot be protected.
  • Chapter 7 works best when most of your debt is unsecured debt like credit card bills, medical debt, delinquent rent from an old apartment, old cell phone bills, and car repossession deficiencies. Frequently, unsecured debt will simply disappear in a Chapter 7.

Clark & Washington - Chattanooga Bankruptcy Attorneys