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Cleveland Tennessee Bankruptcy Law Blog

How to decide whether to pay your bills before filing bankruptcy

Deciding to file bankruptcy is a serious decision. A bankruptcy can remain on your credit report for seven to 10 years. It may be more challenging to get new credit such as credit cards, mortgages and personal loans during that time. If you can secure credit, like an auto loan, you may be looking at higher interest rates, larger down payments and the possibility of needing a co-signer.

If you plan on including debt in your bankruptcy, then you may want to consider no longer making any payments. However, you'll likely begin to receive collection calls and notices in the mail if you do this. If you have student loans, then it's advisable to continue making payments on them since they will most likely be unable to be discharged in bankruptcy.

How should you choose between the many debt relief options?

There are two primary ways that individuals end up in debt — by living beyond their means and being confronted with unexpected bills. The latter can happen as a result of a medical emergency, job loss, divorce, death of a spouse and other non-planned events. While it would be ideal if everyone could pay their bills off, many can't. Debtors often look for debt relief options and end up choosing bankruptcy. It's not necessarily always the best choice for them, though.

It's best if you've exhausted all of your other debt-relief options before deciding to pursue bankruptcy. You should have reached out to your creditors to see if you can work out a payment plan to pay off the bills that you owe. You also should have evaluated credit counseling service options to negotiate with your creditors and allow you to repay your debts. But these options can be costly.

Understanding the 341 meeting for your bankruptcy case

Having money problems is not an ideal situation to be in. Unfortunately, many people in Tennessee and across the country find themselves struggling with debt due to high credit card balances, medical bills, job losses and other issues that leave them with far more liabilities than assets. You may fall into this group, and try as you might, getting back on financial track has not happened yet.

As a result, you have decided to move forward with Chapter 7 bankruptcy. Though the process may seem intimidating, it may be able to help you like it has helped numerous other individuals. Because you want to do your part to ensure that the process is as smooth as possible, you may want to prepare for your 341 meeting.

What do you need to do to get a Chapter 13 bankruptcy?

There are many different kinds of bankruptcy, which is why it can be difficult to decide which one you want to pursue. If you still earn a decent income and have some ability to pay back what you owe, you may want to consider Chapter 13 bankruptcy.

A Chapter 13 bankruptcy is beneficial, because it allows you the opportunity to restructure your debt into a repayment plan. Most repayment plans last three or five years, depending on your financial circumstances.

Behind on medical bills? Think about these points

Medical bills are a huge concern for millions of Americans. These expensive bills might be reduced some by health insurance coverage, but there are still some individuals who are dealing with very high balances on these accounts. If something unexpected happens, such as a job loss, a person's ability to pay for those bills might be limited.

There isn't any reason why a person should have to choose between paying for the medical care they need and taking care of other life expenses. Unfortunately, this is a stark reality for many Americans. Some might not realize that they have options for dealing with this atrocity.

The pros and cons of bankruptcy should be weighed

A Chapter 13 bankruptcy can be very beneficial if you cannot qualify for a Chapter 7 bankruptcy. A Chapter 13 bankruptcy has many pros and cons, but if you are struggling with debt and having a hard time making ends meet, it could be the solution that you need.

What are some of the disadvantages of a Chapter 13 bankruptcy?

Get back into control with a Chapter 7 bankruptcy

You've been working hard, but no matter what you do, it seems like you're never able to catch up on your bills. You're behind on rent, the electric bill, your car insurance and other bills that you have to pay to keep all the things you need.

You have a strict budget, and you've been working at least 60 hours a week. Unfortunately, low pay and long hours aren't helping enough, and you're getting burned out. What should you do?

Bankruptcy: This may or may not be the answer for you

No one takes on debt thinking that they'll be unable to pay it. Whether debt is accumulated because of a medical emergency that is out of their control or because they have enough of an income to justify it, most people have a plan for paying it back. Even if they pay just a small amount monthly, they make ends meet.

Unfortunately, some debts do accumulate quickly and may feel overwhelming. For example, that medical emergency that a person thought would be covered by insurance might become quickly overwhelming when they discover that some of it was performed by out-of-network providers and billed at high rates.

Getting back on track with your personal finances

If you are struggling to make ends meet, watching your past-due balances grow each month and facing credit card bills you cannot manage, you are not alone. Many consumers in Tennessee face a similar situation every day, and while it may seem like there is no way out, it is possible there are options available to you. There are steps you can take to regain your financial footing.

One important step in turning things around is taking control of your spending. No matter how much debt you pay off, it won't matter if you are adding back onto your balances each month or resorting to only making minimum payments on credit cards. While there are some practical steps you can take to regain control of your credit card balances, there may also be some legal steps you will want to consider, such as bankruptcy.

A hardship discharge could help with your Chapter 13 concerns

If you are considering a Chapter 13 bankruptcy, something you might also be worried about is not being able to make your monthly payments on time for the length of the bankruptcy. This is something that you should discuss with your attorney because there is a possibility of a Chapter 13 hardship discharge if you're unable to complete the program in some cases.

The Chapter 13 hardship discharge can be requested if your circumstances change and you're unable to complete the bankruptcy program. For example, if you fall ill and are unable to work and complete the program, then there could be an opportunity for a hardship discharge.