Memphis Bankruptcy Basics

October 31, 2011 · Posted in Finance 

Being a Memphis bankruptcy lawyer has a unique character in that Memphis has the highest bankruptcy filing rate in the nation. Memphis can also call itself special in terms of bankruptcy with two thirds of the filings being the more difficult chapter thirteens.Nationally, Chapter 7 is filed over seventy percent of the time.

Chapter 13 requires the repayment of a portion of your debt. The most important feature is that if one is behind on a house or car for example, a Chapter 13 bankruptcy will allow to make up the amount you are behind and keep the property. The plans last five years and require that you pay excess income over internal revenue service guidelines into the plan

Figures vary,but it is commonly accepted that approximately one-third at best of Chapter 13 plans will end up being completed. It is easy to ask oneself why Memphians use Chapter 13 so frequently, More generous explanations are that being a biblical town, trying to repay some of the debt is more congruent with Christian principles prevalent in the area. A less charitable explanation would be that lawyers use Chapter 13 for the higher associated fees chargeable over the life of the plan. This is opposed to a Chapter 7 plan where the lawyer’s fee would technically be discharged as a debt if not paid before filing..

Another good explanation would be that Tennessee has a very restrictive homestead exemption of $4000 so in order to keep property valued above that amount debtors choose to make payments. In some cases it could be that a lapsed chapter thirteen plan could be due to positive causes. You never know when a big inheritance might have hit.

Chapter thirteen includes a fairly onerous continuing documentation requirement . The one clear instance where a Chapter 13 is called for is where you are behind on property with substantial equity and you have a now steady monthly income which will allow you to cure the deficiency.

Chapter seven’s a typical bankruptcy. You don’t keep stuff in excess of the homestead amount, but you get the immediate relief from debt without the necessity for payments. You can usually also keep a home or vehicle in which you are current with the payments.

A debtor should clearly see if they could make the sacrifices required for a chapter seven and a genuine fresh start. Debtors should keep in mind that the bankruptcy abuse prevention act’s requirement of Chapter thirteen was the most hated provision.

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