The short case. For most people it runs a matter of months, and at the end the qualifying debt is gone rather than rescheduled.
What it clears
Unsecured means no one holds collateral on it. That is the category Chapter 7 is built for, and it covers more than most people expect.
Worth knowing before you file, because this is where people are most often surprised.
Chapter 7 runs through the means test, which compares your household income to the Tennessee median for your family size. Below it, you are presumptively eligible. Above it, there is a second calculation, and Chapter 13 may be the better route regardless.
How a Chapter 7 runs
This is a paperwork process with a short hearing in the middle. Here is the actual order of it.
Bring what you know off the top of your head. You do not need documents to have this conversation.
Federal law requires an approved counseling course within the 180 days before filing. It is short, and it can usually be done online.
Income, debts, what you own, what you owe on it. The day the petition is filed, the automatic stay begins and creditors are notified by the court.
A short meeting with the trustee, roughly a month after filing. Jonathan is with you. In most consumer cases no creditor appears at all.
A second short course, then the discharge order. For a straightforward case this typically lands a few months after filing.
The house and the car
A mortgage or a car loan is secured, meaning the lender holds a claim on the property itself. Chapter 7 can discharge your personal obligation to pay, but it does not erase that claim. In practice that means if you want to keep the collateral you generally need to be current and stay current, and there are separate mechanisms for reaffirming or redeeming.
If you are behind on a mortgage and want to keep the home, Chapter 7 is usually the wrong tool. Chapter 13 is the one built to cure arrears over time.
Tennessee also has its own set of exemptions covering a homestead interest, personal property, and tools of a trade. The amounts change, and how they apply depends on your household. Jonathan will walk through yours specifically rather than quoting you a number off a website.
Common questions
For a straightforward consumer case, discharge typically comes a few months after filing. The meeting of creditors is usually about a month after the petition, and the discharge order follows some weeks after that.
Not automatically. Tennessee exemptions protect a range of property, and most consumer Chapter 7 cases are no asset cases where the trustee sells nothing. Secured property like a house or car is a separate question that depends on whether you are current on the loan.
Child support and alimony, most student loans, recent tax debt, criminal fines and restitution, and debts arising from injuries caused while driving impaired. Arrears on secured property you intend to keep are also not cured by Chapter 7.
There is one short meeting with the bankruptcy trustee, usually about a month after filing. It is not a trial and it is not in front of a judge. Jonathan attends with you, and in most consumer cases no creditor appears.
Related
Tell Jonathan what is happening and he will tell you which chapter fits, or whether bankruptcy is the wrong tool for your situation.