The McKellar Law Firm, PLLC
865-566-0125 | 865-566-0126 (fax)
The McKellar Law Firm, PLLC
603 Main Street Suite 405
Knoxville TN 37902
Chapter 7 refers to a specific section of the Bankruptcy Code that allows qualifying debtors to discharge certain debts while keeping exempt property.
Who Qualifies for Chapter 7 Relief?
There are two ways to qualify for Chapter 7. The first is to make below the median income for a Tennessee family of equivalent size. Income will include any earnings from employment, money taken from an annuity, proceeds from the sale of property, and contributions to household expenses from others. It does not include social security income. Click here to see the Median Income Table put out by the Census Bureau: http://www.usdoj.gov/ust/eo/bapcpa/20061001/bci_data/median_income_table.htm
Even if you make over the median income for a family your size, that does not necessarily mean that you won’t qualify for Chapter 7. Under the Bankruptcy Code, you may still qualify depending on your monthly expenses and disposable income that you have left over.
What is the Bankruptcy Process?
The bankruptcy process will begin by your attorney filing a Petition in the Bankruptcy Court. Along with the Petition, there are a number of other documents filed, including a list of assets and liabilities, a statement of current income and spending, copies of any contracts or leases that haven’t expired, tax returns, a certificate of credit counseling, and About 20-40 days after filing the Petition, a Meeting of Creditors will be held.
This meeting is at the Howard H. Baker, Jr. U.S. Courthouse, located at 800 Market Street, Knoxville, Tennessee, 37902. Link to map. This meeting is an opportunity for the Trustee and your creditors to ask questions about your debts, assets and income. The Trustee, within 10 days, will then file a report stating whether you qualify for Chapter 7 Bankruptcy relief. Usually, the discharge is granted about four months after filing the Petition.
What Needs to Happen Before My Petition Can Be Filed?
First, we will have to determine whether you qualify for Bankruptcy protection. This is done after we meet with you and give you some “homework,” which is information we will need to make this determination and will include income figures, monthly expenses, and other financial information. Next, upon receiving this information back from you, we will advise you as to the best course of action for your financial situation.
Should bankruptcy be the best option for you, then you will need to complete a credit counseling course prior to filing your Petition. You may find information on providers of this service at the following address: http: /www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm.
These classes are available in person, online and via elephone. There is usually then additional paperwork you will need to provide, if you haven’t already, such as pay stubs, bank statements, and tax returns. Next, our office will prepare your Petition and all accompanying schedules and required documents. You will review these and we will make any necessary changes prior to filing.
Can I Keep My Property?
Answer: yes and no. You may keep exempt property only. This property can include:
* A grab-bag of any personal property up to $4,000.00.
* Clothing, storage containers, school books, pictures, portraits
* Health savings accounts
* Pensions
* Worker’s compensation
* Unemployment compensation
* Tools of trade up to $1,900.00
* Homestead up to $5,000.00 for individuals and $7,500.00 for joint owners
For secured debts such as a home or car, you may have the option to keep them and still receive a discharge, depending on your financial situation.
What is the “Automatic Stay”?
The automatic stay goes into effect as soon as you file your bankruptcy petition, and it stops most debt-collection activity. During the stay, most creditors cannot file suit or pursue a suit already filed, contact you via telephone or mail, and usually must stop wage garnishments.
This stay does not apply to alimony and child support. There may be exceptions to this if you have filed for a bankruptcy before.
Can I Transfer My Car/House/Boat/Savings to My Friend/Family Before Filing for Bankruptcy?
No, No, No and No! You cannot give anything away or sell your property for less than “reasonably equivalent value,” or it could be considered a “fraudulent transfer” by the Trustee. If a transfer was completed within one year of filing your Petition, the transfer could be reversed by the Trustee.
Will All My Debts Be Discharged?
No, not every debt is eligible for discharge under the Bankruptcy Code. Certain debts are non-dischargeable, and include child support, alimony, student loans, taxes, debts incurred as restitution payments or debts incurred through fraud.
Frequently Asked Questions
The McKellar Law Firm, PLLC
603 Main Street Suite 405
Knoxville TN 37902
865-566-0125
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