Legal Question in Bankruptcy in Tennessee

Chapter 7 and Chapter 13

There are a number of differences, but in terms effect on your credit report, they are minimal. Chapter 7 bankruptcy is a liquidation. You turn over all of your non-exempt property (which may well be nothing) toa trustee who divides the proceeds among yourcreditors, and with a few exceptions your debts are discharged. Chapter 13 is a payment plan. You pay all of your disposable income(after living expenses) to a trustee for 3-5years. That amount has to equal or exceed what your creditors would get in a Chap. 7 and must pay all priority creditors in full. General unsecured creditors can get less than 100% and maybe even nothing. It allows you todischarge some debts that cannot be discharged in Ch. 7. and allows you to cure mortgage arrearages in order to keep your house. Thereare a number of other differences, and you should discuss with your bankruptcy lawyer which chapter is more appropriate for your situation.

Chapter 13 v Chapter 7

In a Chapter 13, you repay your secured debts (mortgages, car loans, etc.) plus all or part of your unsecured debts (credit cards, signature loans, etc.)

In a Chapter 7, your non-exempt assets (if any) are liquidated to pay your creditors and you are relieved of (almost) all debts through discharge. Some debts are not dischargeable.

Whenever you consult an attorney about filing bankruptcy, (s)he should cover your options in the initial interview before the petition is filed. You may want to repay some debts through a Chapter 13 but not have the income to do it, in which case you cannot come up with a feasible plan and, unless converted to a Chapter 7, a Chapter 13 bankruptcy would be dismissed.