Bankruptcy Lawyer Covington, TN
If you’re thinking about filing for bankruptcy, it’s time to explore your options with the experienced assistance of a bankruptcy lawyer Covington, TN residents trust. Filing for bankruptcy isn’t the right debt relief solution for every financial challenge. However, filing for bankruptcy relief has helped millions of Americans achieve a fresh financial start. Once you schedule a free case evaluation with our Tennessee-based firm, we’ll assess your financial situation and advise you of your options according to our professional opinion. If your situation is a “good fit” for the bankruptcy process, we can help you create a strong case likely to succeed.
If you’re a small business owner, you’ll likely need to file under Chapter 11 of the Bankruptcy Code. If however, you’re not a small business owner, you’ll probably benefit from filing under either Chapter 7 or Chapter 13. Almost everyone is eligible to file under Chapter 13. However, only members of low-income households are eligible for the particularly generous debt relief offered under Chapter 7. Chances are that if you’re eligible to file for Chapter 7 bankruptcy, this will be your preferred option. However, this process isn’t one you should enter into lightly. If you own a lot of valuable property, you might be better off filing under Chapter 13. Why? Chapter 7 bankruptcy is commonly referred to as “liquidation” bankruptcy. This nickname doesn’t mean much for most eligible filers. But if you own a lot of valuable property, this nickname could be consequential for you.
Chapter 7 Bankruptcy Exemptions in Tennessee
Chapter 7 bankruptcy is referred to as liquidation bankruptcy because the trustee assigned to a Chapter 7 filer’s case is empowered to sell any property that filer owns, provided that the property is classified as “non-exempt.” They then pass the profits of that sale along to the filer’s creditors as repayment of their debts. Tennessee law provides many exemptions that allow filers to protect their property from the risk of being sold by the trustee assigned to their case. Our Covington, TN bankruptcy lawyer team knows these exemptions inside and out and can help you protect your property from this risk. Most low-income filers don’t own non-exempt property, so they don’t risk anything by filing for bankruptcy. However, if you own unusually valuable property, you’ll need someone to look out for your interests during the bankruptcy process.
Legal Assistance with Chapter 7 Cases Is Available
If you own a lot of valuable property, please connect with the experienced team at Darrell Castle & Associates, PLLC before attempting to file for Chapter 7 bankruptcy. Some filers with very, very straightforward finances and little property to their name are able to file for Chapter 7 bankruptcy relief successfully. However, if you own a lot of property, you’re going to want an experienced Covington, TN bankruptcy lawyer to guide you in order to better ensure that you remain the owner of your property once your bankruptcy process is complete.
When Is Filing for Chapter 13 Bankruptcy a Good Idea?
If you don’t earn much income and most of your debt is classified as unsecured, dischargeable debt, filing for Chapter 7 bankruptcy may be the best way to obtain a fresh financial start. However, this “ideal” Chapter 7 scenario doesn’t apply to everyone. If you’re ineligible for Chapter 7 bankruptcy relief, you may be able to get “back on track” financially by filing for debt relief under Chapter 13 of the Bankruptcy Code.
Filing for Chapter 13 will allow you to benefit from the automatic stay. This process will halt collection activities, wage garnishments, and possibly even foreclosure actions. The automatic stay will take some of the financial pressure off of you and your family while you work with an experienced Covington, TN bankruptcy lawyer to construct a 3 to 5 year repayment plan for your debt. Reorganizing your debt in this fashion will make it far more manageable to pay down, as you’ll only be required to make payments that are reasonable, given your income level and financial situation generally. At the end of your 3 to 5 year repayment period, if any balances on your unsecured, dischargeable debt remain outstanding, (if you’ve adhered to the terms of your bankruptcy agreement) this remaining debt will be wiped out.
Conversely, if you are eligible for Chapter 7 debt relief but you own non-exempt property that you’re unwilling to part with, filing for Chapter 13 bankruptcy relief will free you from the risk that a bankruptcy trustee will sell your assets in order to repay your creditors.
If I’m Filing for Divorce, Can I File for Bankruptcy at the Same Time?
Many couples choose to pursue bankruptcy at the same time that they are navigating divorce. It is very important that you consult both an experienced bankruptcy attorney and an experienced family law attorney before you file either a bankruptcy case or file for divorce. Why? The order in which you file these actions will dramatically affect how each is resolved. For example, you likely want to avoid filing for Chapter 13 bankruptcy before you’ve filed for divorce, as you don’t want your finances and your ex’s finances to be tied together for the life of your repayment plan. By contrast, if you finalize a Chapter 7 bankruptcy before you file for divorce, you’ll be in the best possible position to divide your assets and construct a fair property division settlement without fear that any of the property and assets impacted by your divorce could be sold by your trustee. In short, check with an attorney before filing either kind of case if you’re hoping to file for bankruptcy and divorce any time soon.
How to Rebuild Your Credit After Bankruptcy
It probably doesn’t come as a surprise that bankruptcy will negatively affect your credit score. For at least the first couple of years after filing, you may have more trouble getting approved for loans and lines of credit. However, that doesn’t mean you will have a low credit score forever. If you put in the work, you can achieve a higher credit rating after bankruptcy sooner than you think. Here are a few tips to consider.
- Make Your Payments on Time: One of the simplest ways to improve your credit score after bankruptcy is to pay all of your bills on time, including your mortgage, credit card bills and utilities. If you can prove that you’re responsible about paying your bills, more creditors may be willing to take a chance on you. If you have trouble remembering to make your payments on time every month, consider setting up automatic payments.
- Don’t Be Afraid to Explain Your Circumstances: If special circumstances resulted in your bankruptcy, such as astronomical medical bills, some lenders may be more sympathetic. Don’t hesitate to write a letter to these credit agencies that explains your situation.
- Apply for a Secured Credit Card: A secured credit card is a credit that allows you to deposit money into an account. Your credit limit will be based on the deposits you make. If you’re having difficulty getting approved for traditional credit cards, a bankruptcy lawyer in Covington, TN may suggest getting a secured credit card. If you make your payments on time every month, you will show other creditors that you’re responsible with your finances.
- Monitor Your Credit: After your bankruptcy is complete, you’ll want to monitor your credit report periodically. Doing this will make sure your discharged accounts are reported correctly and help you catch errors and early signs of identity theft.
- Get a Co-signer: If you need to finance an expensive item, such as a vehicle, a bankruptcy lawyer in Covington, TN may recommend getting a co-signer. This person should have a high credit score and good income. As long as you make timely payments on your loan, you should be able to raise your credit score over time.
- Be Patient: After your bankruptcy process is complete, it might seem like it will take forever to get your credit score back up. The truth is that your credit score won’t be perfect until the bankruptcy falls off your record after seven to 10 years. However, you can improve your score sooner than that by making smart financial choices. Be patient and you will eventually have a good credit rating.
Bankruptcy Terms to Know
Throughout bankruptcy proceedings, you will likely come across some legal terms particular to bankruptcy proceedings that you will need to know. Here are some of the most common and important ones:
- Bankruptcy trustee: This is the person or corporation, appointed by the bankruptcy court, to act on behalf of the creditors. He or she reviews the debtor’s petition, liquidates property under Chapter 7 filings, and distributes the proceeds to creditors. In Chapter 13 filings, the trustee also oversees the debtor’s repayment plan, receives payments from the debtor and disburses the money to creditors.
- Credit counseling: Before you’ll be allowed to file for bankruptcy, you’ll need to meet either individually or in a group with a nonprofit budget and credit counseling agency. Once you’ve filed, you’ll also be required to complete a course in personal financial management before the bankruptcy can be discharged. Under certain circumstances, both requirements could be waived.
- Discharged bankruptcy: When bankruptcy proceedings are complete, the bankruptcy is considered “discharged.” Under Chapter 7, this occurs after your assets have been sold and creditors paid. Under Chapter 13, it occurs when you’ve completed your repayment plan.
- Exempt property: Although both types of bankruptcy may require you to sell assets to help repay creditors, some types of property may be exempt from sale. State law determines what a debtor may be allowed to keep, but generally items like work tools, a personal vehicle or equity in a primary residence may be exempted.
- Lien: A legal action that allows a creditor to take, hold and sell a debtor’s real estate for security or repayment of a debt.
- Liquidation: The sale of a debtor’s non-exempt property. The sale turns assets into a “liquid” form — cash — which is then disbursed to creditors.
- Means test: The Bankruptcy Code requires people who want to file Chapter 7 bankruptcy to demonstrate that they do not have the means to repay their debts. The requirement is intended to curtail abuse of the bankruptcy code. The test takes into account information such as income, assets, expenses and unsecured debt. If a debtor fails to pass the means test, their Chapter 7 bankruptcy may either be dismissed or converted into a Chapter 13 proceeding.
- Reaffirmed account: Under Chapter 7 bankruptcy, you may agree to continue paying a debt that could be discharged in the proceedings. Reaffirming the account — and your commitment to pay the debt — is usually done to allow a debtor to keep a piece of collateral, such as a car, that would otherwise be seized as part of the bankruptcy proceedings.
- Secured debt: Debt backed by reclaimable property. For example, your mortgage is backed by your home, and for an auto loan, the vehicle itself is the collateral. Creditors of secured debt have the right to seize the collateral if you default on the loan.
- Unsecured debt: A debt for which the creditor holds no tangible collateral, such as credit cards.
Legal Assistance Is Available
If you’re interested in exploring the debt relief options that could potentially help you obtain a fresh financial start, connect with the experienced Tennessee legal team at Darrell Castle and Associates, PLLC today. Meeting with our team will not obligate you to file for bankruptcy. An initial consultation session will simply allow you to meet with a knowledgeable bankruptcy attorney who can answer your questions and give you an honest assessment of your case before you commit to a debt relief plan. Investing a little of your time now may save you a great deal of time, money, and stress down the road. We look forward to speaking with you and to learning about how we may be of assistance to you and your family at this time.
Signs It May Be Time to File for Bankruptcy
Filing for bankruptcy isn’t a decision you should make lightly. It can hurt your credit rating for a while, but sometimes declaring bankruptcy is the right decision. Here are several signs that it may be time to file for bankruptcy.
- You have trouble making your minimum payments. Financial experts always advise people to make more than the minimum payments on credit cards and loans to get them paid off faster. However, if you struggle to even pay the minimum each month, you may be in deep financial trouble. It may be beneficial to declare bankruptcy in this situation.
- Creditors and collection agencies call you every day. If you’re behind on your bills, your creditors may start calling you frequently. If it has been months since you’ve made a payment, they may turn your accounts over to a collection agency. Dealing with these phone calls on a daily basis can cause you a lot of stress. If you file for bankruptcy, an automatic stay will be issued and your creditors won’t be allowed to contact you again.
- Your credit cards are maxed out. Ideally, you want to keep your credit card utilization rate at 30 percent or less. If you’ve maxed out all of your credit cards, however, you may be headed for financial disaster. If you’ve charged your credit cards to the limits, your creditors may not be willing to increase your credit lines and you might not get approved for new credit cards.
- You’ve taken out high-cost loans. People who are struggling financially may sometimes turn to high-cost loans, such as payday loans. These loans come with very high interest rates and can be difficult to pay off. Instead of resorting to these loans, you may want to consult a bankruptcy lawyer in Covington, TN.
- You lost your job. If you’ve been unemployed for a while, it’s likely a lot more difficult to pay all of your bills. Without a job, you are more likely to default on your loans. It’s a wiser decision to declare bankruptcy.
- You suffer from extreme stress because of your debt. If your debt is so out of control that it’s causing you to lose sleep at night, it may be time to consider bankruptcy. Declaring bankruptcy can help you get a financial fresh start and relieve your stress levels.