Hard financial times can mean big decisions for those who are trying to keep their households afloat. Many people who have struggled to pay their bills for months or even longer have started to look into all types of financial options. Depending on the extent of a person’s debt, he or she may look into certain debt consolidation programs; however, those programs may not always be effective in dealing with the problem. Some people consider the prospect of filing bankrupt and cringe at the thought. However, bankruptcy can be a very useful option for those who are trying to handle their tough economic challenges.

The goal of bankruptcy and how the system works

Unlike cases that are heard in criminal or civil courts, bankruptcy court cases are dealt with in a bankruptcy court located in the bankruptcy filer’s appropriate district. Although bankruptcy laws have changed throughout the years, the primary goal has remained the same – to give individuals and business owners who are dealing with the pressures of substantial debts a way to start over.

Once an individual makes a bankruptcy filing and the petition has been approved, he or she will receive what’s known as a “bankruptcy discharge.” What this means for individual filers is that they will no longer be held responsible for paying off certain types of debt and the individual’s creditor and bill collectors will no longer be able to make contact with him or her.

What will be required of a person filing for bankruptcy protection in Tennessee?

According to the U.S. Courts, the bankruptcy process begins with the bankruptcy laws that provide those with debt issues six possible bankruptcy options. Those options are:

• Chapter 7 bankruptcy – also referred to as a “liquidation” bankruptcy
• Chapter 9 bankruptcy – generally used by municipalities
• Chapter 11 bankruptcy – commonly known as a “reorganization” bankruptcy
• Chapter 12 bankruptcy – primarily used by family farmers and fishermen
• Chapter 13 bankruptcy – allows for an adjustment of debt for those with regular income

The last option, Chapter 15 bankruptcy, is used by those who have cross-border issues that can involve assets that are subject to both U.S. laws and the laws of one or more foreign countries.

Once a person makes the decision to file for bankruptcy protection, he or she will need to collect all relevant documents and information, attend credit counseling prior to filing and file the case. Once the case is filed, the individual will have a meeting with the creditors and a discharge or repayment plan will be entered within a short time after filing.

The bankruptcy process can be complex and there are certain exemptions that can help protect personal property. Any individual who is considering filing for bankruptcy protection is encouraged to seek legal guidance from a bankruptcy lawyer.