Considering that American families depend on bankruptcy when they don’t have the financial means to cover their expenses, it’s not surprising that many potential bankruptcy filers worry about what will happen to their public benefits when they declare bankruptcy.
What is the Purpose of Bankruptcy?
When individuals file a Tennessee bankruptcy, they generally turn to one of two types of bankruptcy protection available: Chapter 7 and Chapter 13 bankruptcy. In both types of bankruptcy, the goal is to remove the burden of debt from the consumer.
How Does Chapter 7 Help Consumers Overwhelmed by Debt?
Chapter 7 bankruptcy does so by liquidating the petitioner’s assets to pay their creditors. However, some assets are exempt or protected from becoming part of the bankruptcy estate used to pay creditors.
Do Exemptions Apply When Filing Chapter 13 Bankruptcy?
Exemptions also apply to Chapter 13 bankruptcy, but they’re approached differently. Known as the reorganization bankruptcy, Chapter 13 allows petitioners to retain their assets while agreeing to repay their debts over three to five years. At the end of the payment plan period, the petitioner’s remaining debts included in the bankruptcy are discharged.
What Happens to My Public Benefits When I File for Tennessee Bankruptcy?
Tennessee does not allow the use of federal exemptions. Instead, you will have to use the state exemption scheme. When filing for bankruptcy, Tennessee has a set of exemptions that define various
eligible types of property or income that you can exempt from the bankruptcy, such as a home, a car, or a retirement account. But how does filing Tennessee bankruptcy affect common forms of public benefits in Tennessee?
FAQ: Does Tennessee bankruptcy affect my social security income?
Social security, social security disability, and supplemental security income are almost always protected during a bankruptcy filing. Under Tennessee bankruptcy exemptions, most people use Tenn. Code Ann. § 26-2-111 (1)(a) to exempt social security, public assistance, unemployment compensation, and disability benefits. For single debtors filing, it has no coverage limit. The bankruptcy filer’s social security funds are protected by an exemption as long as they’re not commingled.
If you have questions about how filing bankruptcy affects your public benefits, or you need help filing bankruptcy today, call Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney to ask about getting a fresh financial start. We help good people through bad times