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Cleveland Tennessee Bankruptcy Law Blog

Debt may make you feel a variety of emotions

Hardly a day goes by when major newspapers do not have a story about debt. This makes sense, as the average American has roughly $38,000 in personal debt. This amount does not include mortgage loans.

If you struggle to stay on top of your consumer, medical, automotive or other types of debt, you may feel a range of emotions. Fortunately, you may be able to seek bankruptcy protection to help you manage your outstanding debt. You should, though, recognize the emotions you are likely to feel. 

Bankruptcy protections to help keep a home or car

When a homeowner or consumer has fallen behind on home or car payments, they may wonder what to do. The reality is that different personal bankruptcy protections and options may be able to help them with the challenges they face and to hold onto a family home or vehicle they need to get to work every day.

Life circumstances can change quickly and leave struggling homeowners and consumers unable to meet their financial obligations. They may be facing foreclosure of their home or repossession of their vehicle. As a result, it is essential that they are familiar with personal bankruptcy protection options and how they can help them. There are generally two types of bankruptcy protection options that can help meet the needs of struggling consumers in different situations.

Medical debt leads to bankruptcies

Personal bankruptcy protection is a resource for consumers struggling with overwhelming medical debt to consider. An academic study from earlier this year revealed that 66.5% of bankruptcies were related to medical debt. It is estimated that 530,000 Americans file for bankruptcy annually because of medical bills and medical issues, including the inability to work because of medical concerns. Other reasons consumers turn to personal bankruptcy protection include an inability to pay their mortgage, student loans and other circumstances.

Some consumers filing for personal bankruptcy protection turn to the option because insurance coverage is inadequate or they do not have adequate emergency funds and resources to cover emergencies that come up, including medical or others. Unexpected medical emergencies can quickly place consumers in a difficult position which is why personal bankruptcy protections and options are available to help struggling consumers enjoy debt relief from medical bills or other types of debt they may have.

Chapter 7 bankruptcy exemption basics

During the bankruptcy process, and when considering filing for bankruptcy, it is important to be familiar with the differences between exempt property and non-exempt property and what the different designations mean for the filing party. Chapter 7 bankruptcy protection is an important option for struggling consumers to consider which is why they should understand how it may affect them and their property.

Chapter 7 bankruptcy is a liquidation bankruptcy process that allows the filing party to liquidate assets to repay creditors. The filing party is only required to liquidate non-exempt assets, however, which is why understanding Chapter 7 bankruptcy exemptions is so crucial for filing parties and those considering filing for Chapter 7 bankruptcy protection to be familiar with. It can help them rest easy that the process is not designed to make them start over but rather to help them enjoy debt relief.

How bankruptcy options help struggling businesses

Bankruptcy options are not just for struggling consumers but extend to struggling businesses as well. Bankruptcy protections can help individuals and businesses that need help with overwhelming debt and to get back on their feet again.

Though bankruptcy options are available to consumers and businesses, Chapter 11 bankruptcy is a specific option for struggling businesses that are encumbered by debt but are seeking to remain in business and return to profitability. Chapter 11 bankruptcy is a reorganization bankruptcy option that allows a struggling business to reorganize its debts and remain in business. The process includes development of a repayment plan the business must follow.

Bankruptcy is a resource that may help stop foreclosure

For homeowners who have fallen behind in mortgage payments and are unable to get caught up, and are facing possible foreclosure, it is important for them to be familiar with the legal resources available to help them which can include bankruptcy protections. Chapter 13 bankruptcy can provide relief for a variety of concerns struggling homeowners are facing.

The first step is that the automatic stay, recently discussed on this blog, prevents creditors collection actions during the bankruptcy process. The Chapter 13 bankruptcy process is a reorganization bankruptcy process. A reorganization plan is worked out with the help of the bankruptcy court to reorganize the filing party's debts and allows them to repay them over time. The automatic stay can help by preventing the foreclosure during the bankruptcy process.

3 more lies debt collectors may tell you

Tennessee has one of the highest rates of bankruptcy in the country. It is for this reason that state legislature recently approved the Katie Beckett waiver, which aims to help families avoid excessive medical debt. 

Bankruptcy can affect any family, even ones that have been extremely careful not to take on too much debt. A medical emergency or loss of employment can result in a family taking on an abundance of debt to stay afloat. Before filing for bankruptcy, many people hear a lot from debt collectors. You may already know some common lies debt collectors tell. Here are a few more to be wary of. 

A closer look at the automatic stay during bankruptcy

Personal bankruptcy provides a host of protections for struggling consumers to help them with their debts and to enjoy a fresh financial start. One of these protections is the automatic stay that goes into effect once the filing party has filed for bankruptcy and because of significant protection from creditors it provides, is worth taking a closer look at.

Once a filing party has filed for personal bankruptcy protection, an automatic stay goes into effect that prevents any further creditor collection actions while the bankruptcy process proceeds. This is true in both of the primary types of personal bankruptcy protection including Chapter 7 bankruptcy and Chapter 13 bankruptcy. Once the filing party has filed for bankruptcy, and while they are working out their bankruptcy with the bankruptcy court, they enjoy protection from creditors.

The advantages of Chapter 7 bankruptcy protection

Chapter 7 bankruptcy is a debt discharge bankruptcy option that many struggling consumers may prefer. As long as the filing party does not exceed the income limit to qualify for Chapter 7 bankruptcy, they may be able to retain nonexempt property and liquidate other property to repay creditors and enjoy debt relief.

Under a Chapter 7 bankruptcy, the bankruptcy trustee will sell nonexempt property to repay creditors, leaving the filing party with property that is considered exempt from the process according to Chapter 7 bankruptcy exemptions. There are a variety of advantages to Chapter 7 bankruptcy and reasons to file for Chapter 7 bankruptcy that filing parties will want to consider in addition to the fact that it allows the filing party to liquidate non-exempt assets to repay creditors.

Bankruptcy relief for struggling consumers

Chapter 7 bankruptcy protection is one of the two big types of personal bankruptcy protection protecting struggling consumers and their families from the crush of overwhelming debt and financial obligations they cannot meet. Medical debt and other everyday concerns can get struggling consumers into trouble they may wonder how to fix which is why personal bankruptcy options are available to help.

Chapter 7 bankruptcy is commonly referred to as straight bankruptcy or liquidation bankruptcy and provides the opportunity for the filing party who qualifies to liquidate their non-exempt property to repay creditors. To break that down a bit, filing parties qualify according to their income compared to the average income in their state. Additionally, some types of property are excluded, or exempted, from the process and are protected.