How to File for Bankruptcy in Tennessee

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Bankruptcy is a federal procedure, not a state one. That means that filing procedures for Tennessee bankruptcy are similar to filing procedures in all other states. Some provisions vary among states, however.

This includes lists of exemptions that describe the types of property a Chapter 7 debtor will be able to keep, including the well-known homestead exemption.

Anyone living in Tennessee should get an overview of the state's laws about bankruptcy, as well as bankruptcy procedures in general. Bankruptcy can be a complicated legal matter, and the decisions the debtor makes can be irrevocable.

That is why it is often a good idea to hire a bankruptcy attorney to assist with a bankruptcy court filing.

Bankruptcy Process Basics

Most people have heard of bankruptcy. They generally understand that bankruptcy deals with debts, and that a bankruptcy case stays on a credit record for a long time. But few people have a good working knowledge of these often complex legal proceedings.

Filing a bankruptcy case is a way for both individuals and businesses to get out from under overwhelming debt and make a fresh start. Bankruptcy laws also give the creditors an opportunity to get partial repayment from debtors.

Common Types of Bankruptcy

There are several common types of bankruptcy, each identified by the chapter number in the U.S. Bankruptcy Code in which it is discussed.

The most common forms of bankruptcy are:

  • Chapter 7 —‌ the so-called "liquidation bankruptcy"
  • Chapter 13 —‌ "reorganization" bankruptcy

The rules and procedures for Chapter 7 bankruptcy are outlined in chapter 7 of the Bankruptcy Code, while Chapter 13 rules are found in Chapter 13 of the Code.

Federal Bankruptcy Laws

Bankruptcy filers in Tennessee use procedures similar to those that residents of other states use because bankruptcy is handled only in federal bankruptcy courts. Those filing for bankruptcy in Tennessee must follow the federal laws set out in the United States Bankruptcy Code.

These can be quite complicated and difficult to follow without the help of an experienced attorney. All types of bankruptcy cases negatively affect a person's credit report and can make it challenging to get new credit.

Bankruptcy in Tennessee

Tennessee has several bankruptcy districts, including the Eastern District, the Middle District and the Western District, and each of these districts have courts in a number of different cities.

For example, the Bankruptcy Court of the Eastern District in Tennessee has courts located in four cities:

  • Chattanooga
  • Greeneville
  • Knoxville
  • Winchester

A person or business will generally file their bankruptcy petition in the courthouse nearest to where they are located or, in the case of a business, where it operates.

The basic rules for filing bankruptcies in all states, as well as districts and courts in Tennessee, are the same, but procedural rules can differ. That's why it's important to become familiar with the local rules in the court in which a filing is to be made.

Who Qualifies for Bankruptcy in Tennessee?

To determine whether or not you qualify for bankruptcy will depend on which chapter you plan to file.

Chapter 7 Bankruptcy

The most common individual bankruptcy filings are under Chapter 7. Termed “liquidation bankruptcy,” a Chapter 7 bankruptcy involves selling all assets owned by the debtor that are not designated as "exempt" under applicable law. This includes real and personal property.

In order to qualify for Chapter 7 bankruptcy in Tennessee, an individual must pass a means test that looks at how their current monthly income compares to the state's median income to make sure that the Chapter 7 filing is not abusive.

Eligibility for Chapter 7

Individual debtors who meet this means test can apply for Chapter 7 bankruptcy, unless they filed a petition within the prior six months and that petition was dismissed due to the debtor's willful failure to appear before the court or to comply with court orders.

They may also be barred if they voluntarily dismissed a case within the prior six months because their creditors sought relief from the Bankruptcy Court to recover property on which they held liens.

Note that when filing a bankruptcy petition for Chapter 7, certain types of assets are said to be "exempt" from liquidation. That is, the debtor gets to keep them in bankruptcy. States can define these exemptions in their laws or simply accept the federal exemptions. Tennessee has defined their own exemptions, so this is one area of bankruptcy law where Tennessee rules differ from those of other states.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, sometimes called wage earners' bankruptcy, allows an individual with regular income to suggest a reorganization plan to manage their debts.

  • If their income is above Tennessee's median income, the plan will be for three years.
  • If it is less than the state's median income, the plan is for five years. Creditors cannot take action against them during the three- or five-year period.

Who is Qualified for Chapter 13 Bankruptcy?

Any individual, whether an employee or self-employed, is eligible for Chapter 13 relief if their secured debts and unsecured debts, taken together, total less than $2,750,000.

How to File Bankruptcy in Tennessee

If you're planning to file for bankruptcy in Tennessee, take the following steps:

1. Determine Bankruptcy Type

In order to file for bankruptcy in Tennessee, an individual must first determine which type of bankruptcy is appropriate for them. The choice is usually not a difficult one since foreclosure bankruptcy is so different from reorganization bankruptcy. The question is: Is it possible to reorganize payment schedules and get out of debt in time, or is a completely clean slate required to move forward?

2. Understand Tennessee Exemptions

When considering this, it is important to factor in Tennessee exemptions — the state list of assets that can be retained in a Chapter 7 bankruptcy. Tennessee bankruptcy exemptions assist an individual in retaining their core holdings, like a residence and its furnishings, a vehicle and retirement accounts.

3. Fill Out the Forms

Next, find the bankruptcy forms necessary to file a bankruptcy on the U.S. Courts website. Download or print the forms, fill them out, then file them in the appropriate bankruptcy court. This involves listing asset, debts, creditors and exemptions, along with other financial matters.

Legal Advice Is Recommended

While there is no law that requires an individual to retain an attorney, court rules make it clear that a petitioner without an attorney will be held to the same rules, procedures and standards as an attorney.

The bankruptcy court website says: "Seeking the advice of a qualified attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes."

How to Find a Bankruptcy Lawyer in Tennessee

If an individual decides to hire an attorney to file for bankruptcy in Tennessee, there are several reliable places to turn for suggestions. Sometimes a bankruptcy court offers lists of experienced attorneys.

Local bar associations, the Tennessee Bar Association, or the American Bar Association are lawyer groups that generally will be prepared with a list of attorneys experienced in the matter. Those without funds to pay for an attorney can try the Legal Services Corporation.

It's also possible to find a good bankruptcy attorney by asking friends and associates for recommendations. Anyone who has ever hired an attorney can ask that lawyer for recommendations as well. Often an attorney will offer an initial free consultation after which the individual can determine whether they wish to go ahead with an attorney-client relationship.

What Happens After You File Bankruptcy in Tennessee?

In Tennessee, the individual will have compiled their financial records before filing. It is required that they attend a credit counseling course with an approved provider within 180 days before filing.

This assures the court that the individual has looked at all other options for dealing with their financial issues before filing for bankruptcy. They will also have to decide whether to bring in an attorney to help with the petition.

Filing for Bankruptcy Pauses Creditors

After an individual files a bankruptcy petition in Tennessee, creditors are not permitted to take any action to collect their debts. This rule is termed the "automatic stay" and it is an important provision of the federal bankruptcy law. It temporarily puts a halt to all harassing phone calls, repossession, collection letters and threat of lawsuits.

This can be a great relief to a debtor facing collection actions like foreclosure and wage garnishment. The stay applies to collection agencies, government entities, and all other creditors whether or not the precise assets they are seeking are exempt.

Acceptance by the Court

After being filed, the petition is either accepted or rejected. If it is accepted, the court assigns the case to a bankruptcy trustee who arranges a meeting with the creditors. The debtor must attend this meeting and answer questions from the creditors and the court trustee about the case.

Forms Needed to File Bankruptcy in Tennessee

All of the forms an individual or business requires to file bankruptcy in Tennessee can be found on the U.S. Courts website. These can be printed out or downloaded. Different forms are required for different types of bankruptcies, which is why it helps to work with an attorney.

An individual filing under Chapter 7 will use different forms than an individual filing under Chapter 11 or Chapter 13.

The forms required also depend on the personal circumstances of the debtor and the specifics of the estate. There are forms to file for those with an eviction judgment against them, forms for those who wish to request a filing fee waiver, and forms for those who wish to pay their filing fee in installments.

FAQs Regarding Bankruptcy in Tennessee

What happens when you file bankruptcy in Tennessee?

Once an individual files for bankruptcy in Tennessee, an automatic stay is imposed on creditors by operation of law. This is an injunction that forbids them from taking any action whatsoever to collect the debt, including harassing phone calls, collection letters, and even foreclosures and wage garnishments.

A bankruptcy trustee is appointed to oversee the proceeding. After that, the petitioner's attorney arranges a meeting of creditors during which the trustee and creditors can ask the petitioner questions about their assets, debts, income and exemptions. Further proceedings depend on whether the filing is under Chapter 7 or Chapter 13.

How long does it take to file bankruptcy in Tennessee?

Preparing a petition for bankruptcy in any state is harder than one might think. It is essential to compile accurate financial information and to notify all creditors.

How do you qualify for Chapter 7 in Tennessee?

To qualify for Chapter 7 bankruptcy in Tennessee, an individual must pass a means test if their current monthly income exceeds the state's median income to make sure that the Chapter 7 filing is not abusive.

If the individual debtor meets this means test, they can apply for Chapter 7 bankruptcy unless they filed a petition within the prior six months, and the petition was dismissed because of the debtor's willful failure to appear before the court or because the debtor voluntarily dismissed the prior bankruptcy filing when creditors tried to recover property upon which they held liens.

What gets forgiven in bankruptcy?

Many debts can be discharged in a Chapter 7 bankruptcy filing, but not all are dischargeable.

Credit card debt and medical bills can be discharged. But some other types of debt are not eligible for a bankruptcy discharge, including:

  • Federal student loans
  • Court-ordered alimony and child support
  • Certain debts incurred in the six months before filing bankruptcy
  • Some taxes
  • Fraudulently obtained loans
  • Debts from personal injury cases resulting from DUIs

How much does it cost to file for bankruptcy in Tennessee?

In 2022, it cost $306 to file for Chapter 7 bankruptcy in Tennessee and $281 to file for bankruptcy under Chapter 13.

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