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Memphis Bankruptcy Law Blog

Tennessee residents may consider bankruptcy for credit card debt

It is not unusual for individuals across the country, including in Tennessee, to have credit cards. Additionally, many of those individuals also have considerable credit card debt. The amount of debt accrued by consumers can lead to substantial difficulties, and individuals may wish to find ways to handle their debt in an effective manner. 

It was recently reported that the amount of credit card debt amassed by U.S. consumers could potentially reach $1 trillion by the end of the year. This amount would be the highest such debt has ever been. As a result, it stands to reason that many individuals may be struggling to pay off their outstanding balances. Indeed, it was also reported that the average household has approximately $9,600 in credit card debt. 

Bankruptcy can stop creditor harassment over credit card debt

Many consumers in Tennessee and other states are harassed by debt collectors every day. Reportedly, the Consumer Protection Financial Bureau is working on overhauling the rules related to debt collecting and the limits placed on collection agencies. The bureau says a recent study revealed that about three in 10 consumers who were questioned indicated that they had experienced creditor or debt collector calls during the past year. One in three of those said the debt collectors tried to collect amounts that had already been paid, or they demanded the wrong amounts. These calls can be for forgotten medical bills, unpaid credit card debt and more.

Debt collectors must identify who they are, on whose behalf they are calling and the amounts of the debts about which they are calling. The consumer may dispute that debt, and if the collector cannot provide detailed proof within 30 days, they may not pursue the matter further. Sometimes, companies sell their debts to third and even fourth parties, and these collectors may not have the necessary details to provide proof -- and no right to try and collect it. Calls may only be made by collection agencies from 8 a.m. through 9 p.m., and they may be told not to call at work. Furthermore, calls to family members may only be to ask about the client's whereabouts, and the debt may not be discussed.

Chapter 7 may be the answer for some Tennessee residents

Bankruptcy is a debt management option that many Tennessee residents may have considered at one point or another. Chapter 7 is the most common form of bankruptcy, and its liquidation process has allowed numerous individuals to get back to financial stability. As such, individuals who are on the fence about filing their own personal bankruptcy may wish to look into the potential benefits. 

One man in another state recently took advantage of this option. Reports indicated that the chef and restaurateur had accumulated over $1 million but less than $10 million in debt. It appeared that the creditors listed in the report were business related, but it was also noted that there were over 100 creditors involved in the case. Of those specifically named in the report, the debt amounts ranged from approximately $12,000 to over $406,000. 

Debt forgiveness may depend on bankruptcy type in Tennessee

Tennessee residents looking to get back on stable financial ground may wonder about the best routes for doing so. Considering bankruptcy may be a viable route to take, but some individuals may be concerned about what types of debt may be forgiven through this process. Though it often depends on which type of bankruptcy is filed, there are some liabilities that may not be discharged.

Divorced individuals may have specific concerns as many debts relating to divorce may not be eligible for discharge. If individuals owe child support or alimony, those debts will remain on the record and require payment. Additionally, individuals who owe taxes will likely also be required to pay back those debts as certain taxes do not qualify for forgiveness. 

The Cost of Filing Bankruptcy Versus the Growing Cost of Not Filing

Filing for bankruptcy is never an easy decision to make. When creditors are calling and bills are left unpaid, it's hard to imagine a way to pay for an attorney and legal fees on top of everything else. However, the expenses of filing for bankruptcy may be less than the growing costs of not filing. In order to make the best decision for your circumstances, take a look at the cost of filing bankruptcy versus the costs of not filing.

Chapter 7 could help Tennessee residents with mortgage debt

Financial difficulties can affect anyone. When Tennessee residents feel that they are in a tough spot financially, they may wonder whether filing for bankruptcy is an option that they should seriously consider. In many cases, Chapter 7 bankruptcy could help qualifying individuals manage their debt and get back on track.

One man in another state recently utilized this option in order to contend with debt liabilities totaling over $1 million. Those liabilities were mostly from mortgage and home equity loans. Many of those loans had been repaid over the years by taking out other loans, but the situation became more dire when the real estate market crashed. It was also reported that the man and his wife owed more than $56,000 in back taxes for a four year period. The majority of their liabilities were discharged under their bankruptcy filing.

Tennessee residents may reconsider alternatives to bankruptcy

Many Tennessee residents who are facing considerable debt know that the burden can significantly affect everyday life. As a result, it is not unusual for individuals to seek ways in which they may be able to address their debt in hopes of getting back on track financially. However, some parties looking to avoid bankruptcy may find themselves considering settlement options that may not be entirely helpful. 

Companies that offer to reach debt settlements with creditors may seem like a saving grace, but really, they could be a wolf in disguise. Individuals may think that the company will work with creditors to reach a settlement that allows the debtors to pay an amount that is considerably less than their outstanding balances. However, these companies may also charge hefty fees and wait until enough money is accumulated before attempting to pay off any debt. 

Tennessee residents may not lose everything under Chapter 7

When facing financial troubles, many Tennessee residents may believe they are looking at a hopeless situation in which they will either lose their money or lose their property. However, even if individuals file for Chapter 7 bankruptcy in order to liquidate their assets, there is potential for certain property to be exempt from the filings. As a result, individuals may be able to maintain ownership of that property while also taking care of their debt issues.

One man in another state is currently attending to such a matter after recently filing for Chapter 7. Reports stated that the man was a former politician who is now incarcerated due to a theft conviction. Nonetheless, the man was able to file for bankruptcy in order to address over $300,000 in debt. That amount stems from credit card balances and personal loans. 

Alternatives to bankruptcy may not suit Tennessee residents

When Tennessee residents are consumed with debt, they may wish to explore their options for potentially discharging that debt. Many parties may want to look into alternatives to bankruptcy due to fear that their credit scores could be considerably damaged or that they could face other negative impacts. However, bankruptcy could be beneficial, especially when debt management plans may not be the best route.

Debt management plans are typically used with credit counseling agencies in attempts to have outstanding debt balances paid off. However, the process could be lengthy, and individuals may not have the protections that bankruptcy could offer. Additionally, if an individual misses a payment for their management plan, it is possible that the plan could be canceled. Depending on the circumstances of an individual case, bankruptcy may be a more feasible option.

Chapter 13 may help with foreclosure in Tennessee

No one wants to be at risk of losing their home. Unfortunately, some Tennessee residents may face foreclosure if they fall significantly behind on their mortgage payments. In these cases, individuals may wonder if there are any options to stop such action from taking place. Luckily, individuals who qualify may be able to file for Chapter 13 bankruptcy in order to protect their homes from foreclosure.

Missing payments does not necessarily mean that individuals do not want to make the payments or are hoping to avoid paying off debt. Some parties may fall on hard times due to job loss, medical expenses or other financial blows. If a foreclosure notice has been served, individuals may wish to explore their options in a timely manner before foreclosure proceedings are set in motion.