Do financial difficulties have you considering bankruptcy?

On Behalf of | Apr 21, 2021 | Bankruptcy

Financial stress can affect any Tennessee resident in any income bracket. Contrary to popular belief, accumulating high debt is not something that only happens to people with low income, bad spending practices or other irresponsible money habits. For example, a person could have a medical emergency that leads to substantial medical bills, or sudden job loss could result in a person not having a steady income to handle everyday expenses.

Whatever the case may be, you are one of the many people struggling with considerable debt and feeling unsure about getting back on your feet financially. You may have recently decided to gain more information on bankruptcy to determine whether it could be a viable option for your money issues. Depending on your exact circumstances, it could be a worthwhile option.

Deciding to file

The choice to file for bankruptcy is a personal one. Still, it is essential to remember that your financial details will play a role in whether you qualify for Chapter 7 bankruptcy, involving liquidation of assets, or Chapter 13, involving a repayment plan. You will likely not get the final say in whether you file for Chapter 7 or 13 due to the stipulations involved with qualifying. However, either could help you face your financial burdens effectively if you do your part.

It is also critical to keep in mind that some of your debt could remain after completing either of these bankruptcy options. You could still have debt relating to taxes, child support, student loans (in most cases), lawsuit settlements or court orders, and other types of debt that the bankruptcy process will not forgive.

Mistakes to avoid

While successfully completing bankruptcy could help you get your monetary affairs back in order, it does not mean that you should have a last hurrah and max out your credit cards before seeking financial forgiveness. Such behavior could fall into the category of bankruptcy fraud, and creditors could challenge your attempt to file for bankruptcy. If the objection is successful, you could remain on the hook for repaying the debt you accrued in the 70–90 days before your bankruptcy filing.

It is also important to remember that bankruptcy protects certain assets, specifically your retirement funds. As a result, you should avoid withdrawing your funds in an effort to pay down some of your debt before filing for bankruptcy. Instead, consider using the process to its fullest extent while protecting your retirement funds.

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