Filing Bankruptcy in Chattanooga, Tennessee

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Bankruptcy is a legal process designed to give people a financial fresh start. Most people experience serious financial problems at some point, and the purpose of bankruptcy is to help people get back on their feet quickly. Filing bankruptcy in Chattanooga can rid you of all or most of your debt. Tennesseean Dave Ramsey, a radio personality offering financial advice, filed bankruptcy and has seen financial success over the years.

The two most common types of bankruptcy are Chapter 7 and Chapter 13. People who file Chapter 13 usually fall into one of two categories: relatively high income earners who are required to file a Chapter 13, or homeowners that owe less money than their home is worth but have fallen behind on house payments and want to keep their house. Chapter 7 bankruptcy in Chattanooga, on the other hand, is usually filed by people who are unable to live comfortably after they make the minimum payments on everything they owe.

The benefit of filing bankruptcy in Chattanooga is that once you complete the process no one will be able to attempt to collect any debt you may owe them. This means no one can call you trying to collect money, and no one can sue you or garnish your wages. There are some exceptions to this - such as student loans, but for the most part after you file a Chapter 7 bankruptcy all the stress of dealing with bill collectors, having wages garnished due to a lawsuit or worrying about vehicle repossession will stop.

Creditors must also stop taking action against you immediately upon your filing bankruptcy in Chattanooga. Tennessee’s famous guitar making company Gibson Guitars filed for bankruptcy in large part to get immediate relief from having to pay back loans. Immediate relief can help you if you are being sued, having wages garnished, or if you are in danger of having you car repossessed.

You should consider a Chattanooga bankruptcy if you are being sued over a debt that you owe, or if your wages are being garnished. You may also consider bankruptcy when your minimal monthly debt payments leave you little to no money for your basic expenses. Medical bills have increasingly become a burden to many and often bankruptcy is the best choice for people who have had to face an illness and/or a hospital stay.

Luken Communications, the broadcast television holding company based in Chattanooga, Tennessee used bankruptcy protection in order to protect itself from a lawsuit judgment. The company owns several different television stations and used bankruptcy to stay afloat and get a fresh start. The company has since emerged from its Chattanooga bankruptcy in a stronger position than before.

The most common reason for not filing Chapter 7 bankruptcy in Chattanooga is owning high value property that you do not wish to sell. For example, if you own some antique furniture or jewelry passed down from family ancestors that is valued at several thousand dollars the Court may require that property be sold to pay your creditors. If you do not wish to lose valuable property you own then Chapter 7 bankruptcy may not be right for you.

Chattanooga Bankruptcy Lawyers - Estimated Cost

The cost of a bankruptcy lawyer in Chattanooga varies.  You may be able to find lawyers that will charge as little as $500 to file a Chapter 7 Chattanooga bankruptcy. Most attorneys’ fees will range between $1,100.00 and $1,200.00. Having a lawyer help you through the Chattanooga bankruptcy may be beneficial. Most bankruptcy lawyers have filed hundreds of cases so they know exactly what to expect and can inform you of the details to put you at ease.

A Chattanooga bankruptcy lawyer will also be able to spot many potential problems before they turn into actual problems. This help can sometimes make the Chattanooga bankruptcy lawyer cost worth it. Spotting potential problems early in the process can help you avoid possible negative actions.  For example, if you have property that is worth a lot of money recognizing the potential that such property could be seized and sold to pay creditors early in the process makes it more likely that you can end up keeping the property. 

Many bankruptcy lawyers offer free consultations where they will briefly review your financial situation to determine if filing bankruptcy in Chattanooga is right for you and if there are any issues that might affect your bankruptcy. You can also find attorneys through legal aid. Most attorneys will also agree to a payment plan for their fees. Therefore it may make sense to contact a Chattanooga bankruptcy lawyer to see if he or she is a good fit for you and if the cost of a bankruptcy lawyer is worth it.

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How to File Bankruptcy in Chattanooga, Tennessee for Free

The steps to file for bankruptcy include collecting and filling out documents, taking a credit counseling course, filing your case, and making sure the Trustee assigned to your case receives certain documents. 


Collect your Chattanooga Bankruptcy Documents

There are a few documents that you will need in order to file a Chattanooga bankruptcy. First, you will need all paystubs or records of payment for the previous 2 months. Most people will have paystubs, but if you do not receive paystubs, you can use bank records, invoices, and even statements to show proof of income. For example, a statement from a family member saying that they provide you with a certain amount of money each month can be used to prove income. 

You will also need a copy of your most recent tax returns in order to file a Chattanooga  bankruptcy. If you were not required to file a tax return, then you need to let the Trustee in your case know that you were not required to file.

Take Credit Counseling

In addition, you will need to take a credit counseling course BEFORE you file. It is very important that you take the course before you file. If you do not take this course before you file, then your Chattanooga bankruptcy case will be dismissed. This course can be done online or in person and costs range from $15 to $50. The course takes anywhere from 30 minutes to 2 hours. After you complete the course you will be issued a Certificate of Completion that contains the date and time you completed the course.

Complete the Bankruptcy Forms

You will need to complete a bankruptcy petition. This document contains a series of Schedules that you need to fill out - these documents give a detailed description of your current financial situation, such as your monthly income and expenses, debts owed, and all the property that you own. It is very important to be as accurate as possible on these Schedules. Taking your time to fill these out accurately and completely can save you a lot of time and avoid potential problems as your Chattanooga bankruptcy case proceeds. You can print these Bankruptcy documents and Petition at home or take them to a printing service for printing. You must fill them out completely, making sure to sign and date where required.

Common mistakes people make in filling out the Chattanooga bankruptcy forms include not listing all the property that they own or not itemizing the property. It is much better to list out each piece of furniture you own, for example, as opposed to just listing everything as “household furniture.” To avoid making mistakes, you’ll want to value your property based on what you could sell it for through a yard sale.  

Get your Filing Fee

Another cost associated with filing bankruptcy is the filing fee. The filing fee for a Chattanooga Chapter 7 bankruptcy is $335. This fee is paid to the Bankruptcy Court. Some of this money is used to pay the Trustee that is appointed to your case.  

If you do not have $335 to pay the Court at the time of filing a Chattanooga Chapter 7 bankruptcy, you have two options. One is to file a form asking the Court to allow you to pay the filing fee in installments. These requests are almost always approved. A second option is to ask the Court to waive the fee. A fee waiver is more likely to be granted the less income you have.  Fee waivers are routinely granted if your income is below 150% of the federal poverty level.

In order to file your Chattanooga Chapter 7 bankruptcy you will need to print out your bankruptcy forms. You can print these forms out at home on your own printer or take them to a local store that will print the forms for a fee. The Bankruptcy Court in Chattanooga will also provide you the forms for free. It is important that the forms be printed on only one side. You will need two copies of all your bankruptcy forms.

Go to Court to File your Forms

Once you have the forms completed and your filing fee, installment fee request, or fee waiver request, you are ready to file Chapter 7 bankruptcy in Chattanooga. You’ll need to take all the documents to the Federal Bankruptcy Court in Chattanooga. The clerk will take the documents, stamp them with the current date and time, and file your Petition.

Mail Documents to your Trustee

At this time you will also be assigned a Trustee. The Trustee is not a Judge. They are usually private attorneys charged with making sure proper procedure is being followed and that there is no money or property available to give to creditors. You will need the name and address of the Trustee assigned to your Chattanooga bankruptcy case so that you can mail certain documents such as your paystubs and federal income tax returns.

Take Bankruptcy Course 2

You are required to take a second bankruptcy course. This course is to be completed after the filing of your Chattanooga bankruptcy. Like the first credit counseling course, this debtor education course can be taken online or in person and there a several different approved providers. The debtor education course usually costs under $25 and is required in order to receive your discharge, which is the court order eliminating your obligation to pay back debts you had at the time of filing bankruptcy.

Attend your 341 Meeting

In the days following the filing of your Chattanooga Bankruptcy Petition, the Court will set a date for your Meeting of Creditors. This meeting will include you and the Chapter 7 Trustee assigned to your case. This meeting makes sure that you are knowingly filing for bankruptcy protection, that the information in the Petition is correct, and that all the necessary documents - like paystubs and tax returns - have been given to the Trustee. Most of the questions in your Meeting of Creditors are going to concern information already contained in the Petition, but it is still a good idea to take some time to prepare for your Meeting of Creditors.

While it is very unlikely that any creditors in your Chattanooga bankruptcy will show up at your meeting, they are allowed to attend. They can ask questions but only questions that are very limited about the Petition and perhaps any secured property claim they may have like a car or house. 

Dealing with Your Car

Many people who file Chapter 7 bankruptcy in Chattanooga owe money on a car they wish to keep. In such a case you must continue to make your monthly payments on the vehicle. If you fall behind on the payments, a Chapter 7 bankruptcy will not help you.

Sometimes it might make sense to surrender your car after you file a Chapter 7 bankruptcy in Chattanooga. Surrendering your car means that you give the car to the person who loaned you money to purchase the car. If the car payment is too high for you and/or the total owed on the car is far higher than the value of the car then surrendering the car and getting rid of what is owed might be a good solution.

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Tennessee Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for Chattanooga

Tennessee Means Test

Filing Chapter 7 bankruptcy in Chattanooga also requires that you qualify for bankruptcy through the Tennessee Means Test.  This test sets certain income limits based on the county you reside. If your income disqualifies you from filing a Chapter 7, you might want to consider filing Chapter 13 bankruptcy instead.  The Tennessee bankruptcy Means Test is used to ensure that people who have higher income pay some of their debt back to creditors.

Median Income Levels for Tennessee

Tennessee Median Income Standards for Means Test for Cases Filed On or After May 1, 2019
Household SizeMonthly IncomeAnnual Income
1$3,946.75$47,361.00
2$4,985.75$59,829.00
3$5,707.75$68,493.00
4$6,523.58$78,283.00
5$7,273.58$87,283.00
6$8,023.58$96,283.00
7$8,773.58$105,283.00
8$9,523.58$114,283.00
9$10,273.58$123,283.00
10$11,023.58$132,283.00

Poverty Levels for Tennessee

Tennessee Fee Waiver Eligibility for Cases Filed On or After May 1, 2019
Eligible for fee waiver when under 150% the poverty level.
Household SizeState Poverty LevelFee Waiver Limit (150% PL)
1$1,040.83$1,561.25
2$1,409.17$2,113.75
3$1,777.50$2,666.25
4$2,145.83$3,218.75
5$2,514.17$3,771.25
6$2,882.50$4,323.75
7$3,250.83$4,876.25
8$3,619.17$5,428.75
9$3,987.50$5,981.25
10$4,355.83$6,533.75

Tennessee Bankruptcy Forms

A Chattanooga bankruptcy petition consists of many different forms. The bulk of these forms are Schedules which are designed to give a complete snapshot of your financial situation. For example Schedule A/B requires you to list all the property you own - this includes a home you may own, your car, furniture, any stock you own, retirement accounts, and anything else you may own. Schedule I of your Tennessee bankruptcy forms will detail your income while Schedule J will detail your expenses.

There are also local forms that the court requires when filing a Chapter 7 bankruptcy in Chattanooga. The only one you are likely to need to fill out is the Statement Regarding Payment Advices or Other Evidence of Payment. Filling out this form certifies that you are including all paystubs you have received over the previous 60 days or that you do not receive paystubs.

Tennessee Exemptions

Each state has their own rules about the amount of property a person filing bankruptcy is allowed to keep. The property you are allowed to keep is known as exempt property. You are allowed to keep your exempt property meaning that it cannot be used to pay off creditors. In Tennessee you are allowed to keep up to $10,000 of personal property when you file a Chattanooga bankruptcy, for example. Tennessee exemptions also allow you to keep up to $5,000 of value in your home and $1,900 of tools and equipment you use for your job.

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