Lost Your Job? An Experienced Bankruptcy Attorney Can Help

TRI Writer • October 25, 2021

If you’ve lost your job, and you are unsure how you’ll successfully manage your finances in the months or years to come; you are not alone. In fact, as of May 2020, the unemployment rate was the worst it’s been since the Great Depression. If you find that you are out of work and struggling with debt, you may want to consider filing bankruptcy.

Chapter 7 vs. Chapter 13 Bankruptcy

There are two main types of individual bankruptcy (not business bankruptcy), Chapter 7 and Chapter 13.

Chapter 7 bankruptcy is fast – particularly in comparison to Chapter 13 bankruptcy. Many Chapter 7 bankruptcies are complete within months, while the Chapter 13 bankruptcy requires a minimum of 3 years, and could require up to 5.

Chapter 7 is generally the best option for people with high debt compared to low income and little to no assets. Generally Chapter 7 is not as well advised for individuals who don’t qualify for Chapter 7 due to their income; have excessive non-dischargeable debts like child support; have fallen behind on their house or car payments; or would benefit by using the power of chapter 13 to lower their interest rates on a car. If the filer has the income to cover the payments, but just needs to catch up, Chapter 13 makes this possible.

Chapter 7 is referred to as the liquidation bankruptcy because non-exempt assets are liquidated with proceeds distributed to creditors. Individuals with substantial resources/assets may prefer Chapter 13 as no assets are sold to pay creditors in a Chapter 13 bankruptcy.

Filing Chapter 7 bankruptcy r equires passing the means test; a standard test that determines whether or not a filer’s income qualifies them for Chapter 7 bankruptcy protection. Those who do not qualify for Chapter 7 bankruptcy may qualify under an exception (called ‘a Lanning deviation’) and also can often benefit from filing Chapter 13 bankruptcy.

Once a Chapter 7 bankruptcy is filed, and the court liquidates any non-exempt assets to distribute funds to creditors. The court issues a discharge of debt that essentially removes the filer’s liability to pay any and all dischargeable debts included in the bankruptcy. In comparison in Chapter 13, the debtor is protected, you are left alone to pay creditors what the Judge agrees you can afford. The Chapter 13 used to be referred to as a “wage earner” bankruptcy because it was designed for employeeswith a regular paycheck. Now its opened up for folks with other types of income including roommate contributions; side hustles; disabilities; odd jobs; self employment; and internet income. In effect, all persons with reliable income should consider the hope provided in a carefully crafted and individualized Chapter 13 plan as this type of bankruptcy reorganizes the filer’s debts and finances into a plan allowing them to pay back their creditors over the course of three to five years while retaining their assets.

What About Non-Dischargeable Debts?

If you’ve lost your job, and you’re considering filing bankruptcy, you probably have concerns about what debt is dischargeable and what debt is nondischargeable. Dischargeable debt refers to consumer debts like credit cards, other revolving debt, personal loans, etc. After filing bankruptcy and receiving your discharge, the filer is no longer responsible for paying discharged debts, but they will still be responsible for paying any non-dischargeable debt. Non-dischargeable debt includes:

  • Family Court Debt: Spousal or Child Support, etc.
  • Criminal Court Debt: restitution payments, fines, traffic ticket fees, etc.
  • Government Debt: Back Taxes, Student Loans, etc.

If you’ve recently lost your job and you aren’t sure how you’ll pay your debts, consider speaking with a bankruptcy attorney. Financial struggle is always difficult, but it is particularly stressful and unnerving during uncertain times. Please don’t hesitate to contact Ken Rannick. Most bankruptcy offices in the Chattanooga area don’t have a single Consumer Bankruptcy Specialist on staff. You are in good hands with Kenneth C. Rannick P.C. Get in touch with Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney as soon as possible.

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Subchapter 5 Bankruptcy: Unlocking New Possibilities for Tennessee Residents

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Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses?  In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.

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