It's the word that nobody wants to hear.  Bankruptcy.  If you've gotten so far in debt that bankruptcy is a legitimate option for you, then you shouldn't be scared off by the stigma of the word.  Bankruptcy was designed for people in your situation to help them get their financial lives in order, and either start over again or reorganize their life in a way they can become fiscally responsible for it.  There are several different types of bankruptcy you can file for in Tennessee, most of which come from the federal bankruptcy laws.  While each state can set various rules and standards for bankruptcy in their state, the majority of bankruptcy laws are federal, and they are heard in a federal court.

Tennessee currently has one of the highest rates of bankruptcy filing in the United States, with over 20,000 filing for either Chapter 7 or 13 in 2008 and over 13,000 pleas already having been filed in 2009.  Currently, Tennesse has the second highest bankruptcy filing rates in the country, and they even had the highest bankruptcy rating in the country in 2007 with about 39,000 seeking assistance from the program.

That is what bankruptcy is, helping people with their debt.  There is a cost to filing bankruptcy in Tennessee, however.  The mark on your credit can last for up to 10 years, and that is if you don't get in financial trouble again.  Even though it is a helping hand to those who need if, filing for bankruptcy in Tennessee became more difficult in 2005 with the Bankruptcy Abuse Prevention and Consumer Protection Act.  This law made it more difficult to file for bankruptcy by introducing new Chapter 7 bans and higher payments on other types of restructuring bankruptcy.  This was designed to only let those who truly need help get it.

The Chapters Of Bankruptcy

There are several different Chapters of bankruptcy, each with its own sets of rules and guidelines that must be followed in order to recieve assistance.  They have a wide range of debt elimination plans in order to make your debt easier to handle.

• Chapter 7- Complete Liquidation- this takes close to everything you have and sells it in order to pay off your debt.  This was a popular option until the BAPCPA passed, which made it much more difficult to file.  This chapter is used by both businesses and individuals.
• Chapter 9- Municipal- This is bankruptcy for a municipality, which allows them to restructure their debt.  The most famous of these way in Orange County California.
• Chapter 11- Reorganization- This chapter allows businesses to reorganize their debt in order to repay it over time.  This allows them to stay in operation long enough to make bad financial decisions right again.
• Chapter 12- Farmers- This chapter deals exclusively with family farmers and fishermen.  It takes into consideration their special financial needs to remain in operation.
• Chapter 13- Rehabilitation- This restructures an individuals debt into a managable payment system without the need for the taking of property on the federal level. 
• Chapter 15- Foreign Debt- this is for foreign companies who have debt in the United States, and U.S. companies who have debt abroad.

Individuals Filing For Bankruptcy In Tennessee

There are two basic options if you are an individual filing bankruptcy in Tennessee. 

Chapter 7

This is the option that will stay with you the longest, but you debt will go away for the time being.  You credit will be marked for 10 years, but you will have the opportunity to build it back up.  Chapter 7 bankruptcy liquidate everything you have in order to pay back as much of your debt as possible.  You'll have to go through the means test, which gauges if your truly can or can't pay back your debt without filing bankruptcy, and then it goes to the judge.  This option of bankruptcy tends to be popular with those who don't own a home and have several other debts.  There are some debts that aren't covered upder Chapter 7, including

• Child Support and Alimony
• Student Loans
• Taxes and Government fines
• Certain purchases made within a certain amount of time before filing, which is 90 days in Tennessee

This straight bankruptcy, after being filed, will give the individuals creditors that option to petition at the 341 hearing, and if none do, your debt and stuff is gone.  You will be allowed to keep a small amount of belongings, but it will be a bare bones living.  If you are still paying on certain things, like a house or car, and they are not taken with the bankruptcy filing, then you can still be foreclosed on by the lender.

Chapter 13

This is a popular option for homeowners, as it restructures the debt to make it more managable.  Chapter 13 for individuals filing bankruptcy in Tennessee involves creating a payment plan system and submitting it to a trustee appointed by the court for approval.  If it passes, you will have to pay the trustee, and they will pay your creditors.  This will still harm your credit, but it gives you a greater chance to bring your score back up, as you won't be eliminating as much debt, and you will be paying back a healthy chunk.  This will be a big red spot on your credit report until you've finished the payments, which should be in under 5 years.

Businesses Filing For Bankruptcy In Tennessee

There are several options available for all businesses. These are the most common since they do not go for a specific type of business.

Chapter 7

This will completely liquidate the assets of the company, including property, in order to pay back certain debts owed.  The company will then be disolved, so when we say liquidate, it means liquidate.  This is the best options for failing businesses, since it will give the owners a fresh start, and leave them with a clean financial slate, with the exception of the credit markings that come with filing bankruptcy.

Chapter 11

This is making headlines now due to the restructuring of the auto industry.  While they're not filing for bankruptcy in Tennessee, the standards are very similar.  Chapter 13 allows you to restructure your financial assets in order to keep the business in operation.  Your debts are to be placed into a payments system with a budget in order to pay them off in about 5 years.  The big issue with businesses filing for Chapter 11 is that the business must change.  While economic conditions due have something to do with the need to file for bankruptcy, most businesses have to do so because they were no longer turning a profit.  If you are not wiling to change aspects of your business model, you chances of coming out of this bankruptcy will be that much more difficult.