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Cleveland Tennessee Bankruptcy Law Blog

Protections for a family home through bankruptcy

One of the biggest concerns homeowners who are considering bankruptcy may have is the security of their home in the process. When a party is considering bankruptcy, they are likely facing overwhelming debt and have many concerns related to their financial situation and financial future. In some instances, but not all, the party filing for bankruptcy is able to keep their home but they should be familiar with how that may be possible.

The bankruptcy process is designed to help struggling homeowners and consumers repay their debts but it is not designed to make them start from scratch. There are two primary types of personal bankruptcy including Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy is a liquidation bankruptcy options that allows the filing party to liquidate non-exempt assets to repay debts. Homestead exemptions at both the federal and state levels help to protect some of the value of a home. Chapter 13 bankruptcy, on the other hand, allows the filing party to reorganize and repay their debts.

Be careful using credit cards if thinking about bankruptcy

If you are a Tennessee resident struggling with credit card debt, you may be contemplating Chapter 7 bankruptcy as a last resort for discharging your debts and getting back on your financial feet.

While you are correct that a Chapter 7 bankruptcy discharges virtually all of your consumer debt, including your credit card debt, you should be very careful about continuing to charge things on your credit cards once you start thinking about filing bankruptcy. Section 523(a)(2)(C)(I) of the Bankruptcy Code contains a presumption against the discharge of any credit card debt you incur with a single creditor within 90 days of filing bankruptcy and use to purchase consumer goods worth $675 or more.

How can bankruptcy help me?

Bankruptcy is a process that allows a party struggling with debt and bills they cannot pay to rid themselves of debt and enjoy a fresh financial start. There are many details to understand and any party considering bankruptcy likely has a variety of questions about how the process works and how it can help them.

Bankruptcy is a process that provides protections to consumers. It is administered through the bankruptcy court and the bankruptcy court process. There are two primary types of personal bankruptcy protections available to consumers and they each work a little bit differently and are intended for struggling consumers in different situations. Each type of bankruptcy protection, however, carries the important automatic stay protection that prevents creditor collection actions during the bankruptcy process.

Tennessee bankruptcies drop, remain 2nd highest in United States

Personal bankruptcy protections are a resource for consumers struggling with overwhelming debt to understand and carefully consider. Bankruptcy options can provide important relief. Though the American Bankruptcy Institute recently reported that May bankruptcy filings dropped based on a year-over-year comparison and sequential comparison, Tennessee was second on the list of states with the highest per capita bankruptcy filings for May.

The bankruptcy filings represented a 4 percent decrease from the same month during the previous year. Commercial Chapter 11 bankruptcy filings showed the sharpest decline. A representative of the American Bankruptcy Institute noted that increased costs of borrowing have added to mounting debts and increased financial strain on both struggling businesses and families.

Help with wage garnishment

For individuals struggling with the stress and strain of overwhelming debt, and trying to get ahead, bankruptcy protections may help provide relief. Facing wage garnishment on top of struggling with debt can create additional pressures and strains that can make the struggling individual feel hopeless.

Personal bankruptcy options, however, may be able to help stop wage garnishment and provide a fresh financial start for the filing party. When an individual struggling with debt is working hard to pay their bills, having their wages garnished so that they have fewer resources to pay down their debt can create overwhelming challenges. Personal bankruptcy options can prevent creditor collection actions from being filed or from progressing.

Bankruptcy options for halting the foreclosure process

For families facing foreclosure, the stress and worry can be unbearable. Fortunately, there are different options available to help those struggling including Chapter 13 bankruptcy which is one option. The two primary types of personal bankruptcy offer certain benefits and can meet the needs of struggling homeowners in different situations.

One potential benefit of Chapter 13 bankruptcy protection is that it may be able to help with the foreclosure process. The Chapter 13 bankruptcy process may be able to permanently stop the foreclosure process in some circumstances. To begin with, once the filing party files for Chapter 13 bankruptcy protection, and automatic stays goes into effect that prevents creditors from pursuing collection actions while the filing party's debt reorganization plan is being worked out.

Qualifying for Chapter 13 bankruptcy

Chapter 13 bankruptcy is a bit different than Chapter 7 bankruptcy in that it allows the filing party to reorganize and repay their debts according to a repayment plan that usually spans 5 years. This is different than Chapter 7 bankruptcy which allows the filing party to liquidate non-exempt assets to repay creditors. The ways to qualify for the two types of personal bankruptcy are essentially the opposite.

While qualifying for Chapter 7 bankruptcy requires that the filing party's income is below a certain level, qualifying for Chapter 13 bankruptcy requires that the filing party has a reliable income to repay their debts according to the repayment plan. It is important to keep in mind that a Chapter 13 bankruptcy can be converted to a Chapter 7 bankruptcy is the filing party's situation changes and that options are also available to exit the Chapter 13 process if the circumstances of the filing party change, allowing them to repay their debts.

Reasons to pay more than the minimum on credit card bills

Credit card debt is one of the most prevalent forms of debt in American society. According to a 2017 report from USA Today, the average American holds approximately $5,551 in credit card debt. With some interest rates as high as 20 percent, some people find themselves in a hole they cannot get out of. 

One reason so many people take out credit cards is due to the fact they come with attractive monthly payments. In some instances, the credit card company may only require you to pay as little as $50 a month. If you make that minimum payment every month combined with the interest rate, you may find your debt barely gets any lower as time goes on. Here are the reasons you should always pay more than the minimum: 

How do I qualify for Chapter 7 bankruptcy?

Chapter 7 bankruptcy can provide a fresh financial start through a liquidation bankruptcy option. If you are considering this option, however, you may wonder how to qualify. If you do not qualify for Chapter 7 bankruptcy, additional options may be available and the court may convert the bankruptcy to a Chapter 13 bankruptcy if you have a reliable source of income. The point is to not despair because different personal bankruptcy protections and options are available for different situations.

To qualify for Chapter 7 bankruptcy the filing party will have to meet the means test used by the bankruptcy court to determine who is eligible to file for Chapter 7 bankruptcy. If the filing party's income is too high, they may not be able to file for Chapter 7 bankruptcy but may still be able to file for Chapter 13 reorganization bankruptcy protection instead. The means test looks at the filing party's average monthly income for 6 months prior to filing for bankruptcy and compares it to the median income in the filing party's state.

Nashville-based guitar maker files for bankruptcy protection

Bankruptcy options exist to help both businesses and individuals struggling with the burden of debt. Nashville guitar maker Gibson filed for reorganization bankruptcy protection recently. Similar to Chapter 13 reorganization personal bankruptcy recently discussed on this blog, reorganization bankruptcy options are also available to struggling businesses seeking to address their debt concerns and return to profitability. Chapter 11 bankruptcy provides an option for struggling businesses to do just that.

The restructuring bankruptcy filing will allow Gibson to remain in business as lenders take control of the business. Gibson's debts equal up to $5000 million and lenders will provide a new $135 million loan to keep the company in business. Gibson will be shedding the consumer electronics unit of its business blamed for much of its financial struggles. Commonly in circumstances of Chapter 11 bankruptcy, the struggling business remains in business during the bankruptcy process, potentially unburdening itself of unprofitable aspects of the business and seeking new capital or a sale of the business to help out.