Knowing that there is a way to alleviate debt brings comfort to many Tennessee homeowners. Filing for bankruptcy has helped many people resolve serious financial crises while, at the same time, building a fresh foundation for a stronger financial future. When a debt is discharged, it comes in the form of a court order, which erases the debt and means it is no longer collectible.
There are certain benefits to using bankruptcy as a financial tool, but there are also several possible downsides, as well. Some of the benefits include acquiring a clean slate, especially when a person has fallen behind on things like utility bills, a mortgage or a car loan, for instance. When the court orders a discharge, a creditor may no longer attempt to collect the debt, which means phone calls from collection agencies must cease.
What are the downsides?
Some people consider it a drawback that a bankruptcy shows on a credit report. In fact, if a person files for Chapter 7 bankruptcy, it remains on his or her credit report for 10 years. Chapter 13, which is considered more of a reorganized payment plan, remains on a person’s credit report for seven years. Another possible downside for certain types of bankruptcy is that some debts are not dischargeable, such as child support or monies the court has ordered someone to pay after he or she was ruled against in a personal injury claim.
Weighing the options and making a decision
Many people believe the benefits of filing for bankruptcy as a form of debt relief outweigh the possible downsides. Some people have even been able to save their homes from foreclosure by filing for bankruptcy. No two people experience a financial crisis in exactly the same way. It is important for each person to learn as much as he or she can about bankruptcy, including state laws and which program is the best fit in a specific situation.