As this blog has discussed previously, residents of Bradley County and other parts of southeastern Tennessee can avail themselves of the country’s bankruptcy system should they find themselves in trouble financially.
Whether it is a Chapter 7 or Chapter 13 bankruptcy, the system exists to give honest families who have run into financial problems the chance to get a fresh start while still ensuring that creditors get treated fairly.
In some cases, though, a debtor can, in the course of a bankruptcy, erase some debt they otherwise would owe. For instance, most debtors who go into bankruptcy do so with a car loan. Since cars depreciate in value over time, a debtor is usually upside down on his or her loan, meaning they owe more than what the car is actually worth on the open market.
However, one option a debtor has during a bankruptcy is to offer to redeem the car or, for that matter, other collateral, at fair market value. For example, if someone owes $10,000 on a car that is worth $5,000 and then files bankruptcy, he or she can elect to pay the $5,000 value of the car to the lender and be done with the debt.
There are exceptions to this rule, and, of course, the biggest trick is coming up with the means of paying to redeem the car or other collateral. Redemption is not a viable option in every case, but it may help some Tennessee families wipe debt off of their books and keep some more of their property. Those Tennessee residents who think this might be a good option for them should speak with a bankruptcy specialist.