Rothschild & Ausbrooks Attorneys At Law | Middle Tennessee Bankruptcy Blog
This Bankruptcy blog by Rothschild & Ausbrooks, PLLC offers information and commentary for residents of Nashville, Tennessee. Our mission is to provide personalized and exceptional legal advice with service above expectations to our clients.
If you are like most of those in Nashville for whom personal bankruptcy is looking more and more like its your only viable option to get out of debt, then you may adopt an attitude of just want to hurry through it and get it done. Your desire is understandable; this likely represents a chapter in your life that you would rather put behind to be able to move on to a brighter financial future. Unfortunately, bankruptcy court proceedings will sometimes try to slow the bankruptcy process down to both prevent the privilege from being abused as well as ensure if it is indeed the best option.
One of the ways the court does this is by requiring you (like all bankruptcy filers) to first go through credit counseling. Indeed, according to the Federal Trade Commission, both those pursuing Chapter 7 and Chapter 13 must complete credit counseling within 180 days prior to filing for bankruptcy. The purpose of this meeting is to obtain an outside perspective on your current financial situation. Part of the job of the credit counselor is to construct a budget to determine if you would be able to reasonably be able to repay your debts without having to file for bankruptcy. He or she will then review his or her plan with you (as well as offer some debt avoidance techniques. You are not legally required to accept the plan that he or she creates, but it must be included in your bankruptcy case paperwork.
The judge may review the credit counselor's plan and find it to be doable. Yet even in that case, the only change is that you would no longer be able to file for a Chapter 7 bankruptcy, and would instead be converted over to a Chapter 13.
Nashville residents might be surprised to learn that more than one-fourth of all U.S. households are laboring to pay large medical debt, according to The Atlantic. Unless, of course, they happen to be one of those families. What is more surprising is that those struggling with medical bills are not the patients with long-term illnesses but the ones who suffer a one-time illness who are struggling more.
A 2017 banking analysis took a look at medical costs and how they impacted middle-income families who earned about $57,000. Researchers looking at 250,000 checking accounts found household finances varied by nearly 30 percent, or $1,300, every month due to medical expenses.
They also found that 40 percent of the households incurred expenses of $1,500 or higher in a yearly period that could be attributed to car problems, taxes or medical expenses. For mid-income households, 16 percent had a single large medical expense, while 39 percent incurred such an expense in a three-year window.
What is really interesting is that the expenses came at about the same time as an increase in income. That may sound lucky, but researchers think it likely that family members typically delay some type of necessary medical care until they have some type of payout. The study shows that expenses came not only with a boost in income but also that the boost came in the form of a tax refund. Unfortunately, refunds, on the whole, do not pay the entire bill and most families—even a year after a big medical expense—continue to struggle financially.
The information in this article is general in nature and is not meant to be considered legal advice.
Tennessee is not immune to the sometimes widely fluctuating ebb and flow of local and global economies. If you've recently made your way through some pretty rough financial waters, you are definitely not alone in the struggle. In fact, Chapter 7 is often the means individuals choose for obtaining immediate debt relief when serious financial crises hit.
As you come off the end of a bankruptcy situation, however, you might be a bit worried about your future. If you take some time to talk with someone who has debt relief experience, you can learn more about how to rebuild financial stability. A past financial crisis need not keep you from moving forward to a stronger financial future.
Key factors to keep in mind
You may feel overwhelmed when thinking about starting over from the ground up. The following information may be useful as you create a plan to get things back on track in the wake of bankruptcy:
There's never a bad time to develop good spending habits. Especially if poor spending habits are part of what led to your initial financial problems, you'll want to keep close tabs on your expenditures and cut back on financial waste.
A bankruptcy shows on your credit report for seven to 10 years, depending on whether you filed Chapter 7 or Chapter 13.
Regular review of your credit report after discharge of your debts can help ensure that all information on your report is correct. You wouldn't want a paid debt to still show as delinquent!
Obtaining a secured line of credit is a great way to rebuild your credit score and regain financial independence. A card issuer agrees to provide anywhere from $200-$500 credit, which may increase as time goes on and you make timely payments to satisfy the balance every month.
You might also consider taking out a small personal loan to help increase your credit score. Of course, raising your score hinges upon staying caught up with your payments.
Achieving financial stability after bankruptcy is challenging. It can be quite stressful, especially if you run into legal obstacles related to your debt relief situation. You may also learn that not all your debts were dischargeable, in which case you'll likely continue making payments toward those debts as you try your best to lay the groundwork for a better financial future. The good news is that there are many financial and legal support resources available to assist you.
If you’re considering your bankruptcy options in Nashville, you may be wondering whether Chapter 7 is the best decision for you. While many people opt for Chapter 7 in order to get themselves back on track financially, it’s important for you to have all the facts before moving forward. That’s why Debt.org offers the following information on Chapter 7 to help you determine whether this option will satisfy you financial needs.
There are a few factors to look at that will help determine whether you’re a good candidate for this type of bankruptcy. For instance, are other areas of life affected by your debt? People in dire financial straits often experience issues within interpersonal relationships or might even develop emotional or mental complications as result. You should also take a close look at your finances. Does your amount of debt rival that of at least half of your yearly income? Do you earn less than other people in your area? Do you have little money left over after paying off your monthly debts? If so, filing for Chapter 7 might be a good choice.
Unsecured debt (such as credit cards or medical expenses) can be discharged by Chapter 7 bankruptcy. That means you won’t be accountable for paying off this type of debt once you are approved by the bankruptcy court. Additionally, you won’t have to worry about assets or possessions being seized, particularly when they are considered necessities (such as your car and home). Some types of debt cannot be discharged, however. Taxes, alimony, and child support payments will remain after the proceeding, as these fall outside the common exemptions.
Filing a petition will be the first step to get bankruptcy proceedings started. This entails providing information on your current financial state, including details of income and assets, tax returns going back at least two years, amount of debt, and any official agreements you’ve entered into. Next, creditors will be given an automatic stay, which means they must cease and desist collection efforts until the hearing has been completed. Once you’ve been granted Chapter 7, you can begin to rebuild your finances with a clean slate. In general, the entire process can take about four months to complete.
As most Tennesseans are aware, credit card debt can accumulate in a short period of time, but can take years to pay off. While the spending may have been inevitable, the price one might pay for large amounts of debt can be costly. What are the main causes of debt in America, and how do consumers address this financial blow?
Pocket Sense points out in an article on credit card debt that not all situations arise as a result of irresponsible spending. Instead, many grapple with debt for a number of complex reasons, including loss of income and emergencies. Unemployment is one of the main causes of credit card debt, since turning to credit card use can be inevitable during this difficult chapter. Of course, emergencies never occur at the right time, and credit cards often come to the rescue. A misunderstanding of one's credit can also invite issues down the road, especially for those who do not pay bills on time.
Some of these seemingly minor issues, including minor bill payment slip-ups, can present problems in the future if unaddressed. Bankrate emphasizes that a striking number of Americans -- roughly 75 to 80 percent -- struggle with debt in some form. First, it is always a wise choice to get acquainted with one's financial options. As Bankrate explains, personal loans are just one way consumers can consolidate debt, as they often come with lowered monthly payments, an improved credit score and other benefits. A balance transfer credit card is another solution Bankrate suggests to readers; this plan allows debtors to move debt from one credit card to a new one offering better interest rates. And although declaring bankruptcy can come with its own set of challenges, Bankrate also supplies this option for those with a crucial need for debt management.
Tennesseans currently wading through a sea of debt know all too well that recovering from this financial hit can take a considerable amount of time and effort. Not only does a money issue create immediate complications; it can linger and worsen if unaddressed. Although each situation can be unique, a common question surfaces during this process: what are the main differences between Chapter 7 and Chapter 13?
Pocket Sense provides an accessible rundown of Chapter 7 bankruptcy and Chapter 13 bankruptcy, explaining that these two routes are the most commonly used among debtors across the nation. The main difference between these two plans lies in the details; while Chapter 13 cancels only the debts that a consumer cannot pay back within a three- to five-year timeframe, Chapter 7 has the ability to cancel the large majority (if not all) of a consumer's unsecured debts. Debtors must meet eligibility requirements in order to move forward with either plan. As Pocket Sense describes, Chapter 7 bankruptcy requires debtors to complete a Chapter 7 test. Chapter 13 places more focus on one's unsecured and secured debts.
One article in Money Crashers gives more specific guidance on choosing the right bankruptcy plan, first pointing out that Chapter 7 may be a better choice for those with low income or few assets. Furthermore, those who choose Chapter 7 generally do not have the funds needed to file Chapter 13 to begin with. Chapter 7 might also be ideal when debts are simply too high. Money Crashers advises readers to opt for Chapter 13 when there are vital assets in the picture -- contrasting from Chapter 7, debtors who file Chapter 13 usually pay off debts with current income. By the same token, Chapter 13 is a wise choice for those with a consistent income used to address surmounting debt. Ultimately, it is up to the consumer to make this important decision, but the end goal remains the same: to get out of debt and back to one's life.
One of the most frustrating and stressful aspects of dealing with a substantial amount of debt are the phone calls and efforts of debt collectors and creditors to get money from you. Sometimes, these efforts can involve more than just calls and letters – they may even attempt to collect on debts by taking your property.
This action is repossession, and while it may seem inconceivable that a third party could come and take your property, it is possible if you are behind on certain payments. If you are a Tennessee consumer overwhelmed by debt and unsure of how to make the stress stop, it could be helpful to consider the benefits of consumer bankruptcy.
Understanding the process of repossession
Repossession can happen if you are behind on payments on items such as cars, furniture and other items bought on credit. While this is a rather extreme course of action, a creditor can start the repossession process after just one missed payment. If you are behind on your payments and have no hope of ever catching up on your home, it can be helpful to understand the following:
The repossession process can start as soon as the consumer defaults on a contract, which is missing even just one payment.
The creditor will usually contract with a third party to do the actual repossessing of the property.
In many cases, the creditor will not need a court order to start the process of repossessing property.
While a repossession agent can reclaim property, he or she cannot breach the peace or come into your private property to take the item.
The threat of losing your property is frightening. It is normal to feel overwhelmed by this possibility, but you have options. By filing for consumer bankruptcy, you may be able to make the repossession stop by enacting the automatic stay.
The road to a better financial future
If you are dealing with overwhelming debt and have no hope of ever catching up on your own, you may find it helpful to learn more about the benefits of filing for either Chapter 7 or Chapter 13 bankruptcy. This step can allow you to work toward a better financial future and make harassment from creditors stop.
Your situation may feel daunting, but you have various options by which you can claim a better financial future. You can learn more about these various choices by seeking a complete evaluation of your case.
Most adults in Tennessee have faced financial challenges at some point in their lives. Some have been able to quickly rectify their situations by adjusting their spending habits. If you're currently in the midst of a serious financial crisis, you likely already know that things aren't always that simple. Sometimes, no amount of spending adjustment is enough to overcome major debt.
The good news is that there are often bankruptcy options available for people in such situations. If you're considering filing for debt relief, there are several things you should know, including the basic differences between Chapter 7 and Chapter 13, so that you can make informed decisions and choose a course of action that best fits your immediate financial needs and long-term goals.
The wage earner's plan
Chapter 13 is generally for people who have income. The following facts provide more information about this form of bankruptcy, including how it differs from Chapter 7:
Chapter 13 involves a restructuring of finances and reorganization of your payment plans.
This type of bankruptcy typically allows you three to five years to pay back a major portion or all of your debt.
The court may discharge any debt remaining after you fulfill your court-approved Chapter 13 payment plan.
You must prove you have enough disposable income to satisfy your debt under a Chapter 13 plan.
In short, if you can financially afford a Chapter 13 plan, then the court expects you to choose that option over Chapter 7. Chapter 7 usually involves a complete liquidation of assets in order to satisfy your debts. Chapter 13 allows you to retain ownership of your personal and business assets.
Other Chapter 7 facts
Certain assets are exempt from liquidation under Chapter 7 bankruptcy regulations. The following list shows some of those exemptions and may help you determine which bankruptcy option is best in your case:
Exemptions under Chapter 7 In Tennessee include equities in real estate, household goods and motor vehicles.
The amount of equity for each exemption varies.
When liquidation occurs, the court discharges any debt attached to those assets.
Chapter 7 bankruptcy generally discharges debt but not liens.
You must file for bankruptcy in good faith, as bankruptcy abuse is punishable by law. Chapter 7 bankruptcy usually remains on your credit record a couple years longer than Chapter 13. Either form of debt relief, however, may be a viable option toward overcoming serious financial debt and laying the groundwork for restored financial stability down the line.
Most financial problems are resolvable if you understand the options available and seek support to help determine which form of debt relief best fits your situation.
Countless Tennesseans struggle with student debt; some even carry this burden for decades. A financial stressor that can cripple the wallet and affect one's overall quality of life, student loan debt is a topic that has plagued America over recent years. Fortunately, there could be a light at the end of the tunnel.
In February, CNBC noted that President Trump could make it easier to address student loan debt through bankruptcy. The report revealed the Education Department's plans to review the process of discharging student loans -- a step that CNBC called a definite move forward. The review would include a consideration of the ways undue hardship claims affect borrowers; ultimately, they mentioned possibly modifying how those claims would be moderated through bankruptcy. Some argue that "undue hardship" was never properly defined, making it difficult to navigate student loan debt cases. CNBC shares that college-loan balances in the country have skyrocketed to $1.4 trillion -- higher than ever before.
NerdWallet immediately criticizes the myth that student loans are impossible to discharge in an article on filing bankruptcy for student loans. The financial resource goes on to state that, although it can be challenging depending on the situation, such routes are possible. NerdWallet mentions the same issue as CNBC: undue hardship. Debtors must prove this hardship in order to find relief through bankruptcy, and sometimes this might also require an adversary proceeding. Debtors must usually prove the following three factors of the Brunner test:
Making loan payments would prevent one from maintaining a standard of living
Existing circumstances show that financial struggle will likely persist
Good faith efforts to pay the debt have been made
Once debtors have begun the bankruptcy process, they may make plans for loan discharge. There may be many details to this process, and Tennesseans going through this struggle may look to local resources for additional assistance.
With the endless stream of weekly deals and the perfect products, overly frequent shopping can be all too tempting. While retail therapy can be cathartic to some degree, there can be too much of a good thing. Some Tennesseans struggle with crippling credit card debt as a result of this habit. Fortunately, there are some steps one can take to bring financial balance back to life again.
Money magazine recognizes the common problem of excessive spending habits, and how they affect a great number of Americans today. Referring to experts to show that shopping addictions are a real problem, Money continues by noting the multifaceted concerns a shopping habit can expose. For instance, not only can a shopping addiction inflict damage on one's wallet; it can also come with serious psychological repercussions. Consumers often display signs of anger, anxiety or regret after making a big spend.
While the emotional effects can vary, Money suggests that readers try to trace shopping habits back a particular event or feeling -- this practice can pinpoint underlying issues that may have sparked the excessive spending. By slowing down and acknowledging thoughts and feelings, consumers may be more likely to use better judgment when shopping.
Today also takes a look at shopping addictions and what consumers can do to address the problem. First pointing out that the term 'shopaholic' is no light matter -- in fact, it reflects a compulsive buying disorder that results in surmounting consumer debt -- Today shares that almost 7 percent of Americans are addicted to spending. Some consumers can easily fall into a vicious cycle of spending and facing credit card debt (and thus guilt). Today mentions a number of recovery programs to address this problem, which can help clarify the warning signs. They also encourage readers to spend time away from those who influence shopping sprees, and to spend time with family and friends in environments that do not require money. With enough proactive steps, consumers can break free from shopping addictions and find financial freedom once again.
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