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Chattanooga Bankruptcy Law Blog

The possible consequences of falling behind on monthly payments

It is no secret that dealing with the burdens of debt can be a stressful and taxing experience. If you are staring down mountains of consumer debt, you could be experiencing a variety of hardships, and you might wonder how these issues will impact your financial future.

Debts can come in a variety of forms, some of which may be difficult if not impossible to plan for, such as a sudden medical emergency or a loss of employment. Regardless of how you get to this point, if you are unable to meet your financial obligations, it might be advisable to explore the available options for debt relief.

Helping you address medical debt problems

While we try to do everything in our power to stay healthy or overcome illnesses and ailments, we can still face many medical issues. The cost of healthcare is ever increasing, making it difficult for some patients to pay their bills right away. While payment plans are an option, when medical debt continues to grow because ongoing medical care is necessary, it can seem impossible to ever reach a point where their balance will return to zero.

When faced with such a trying financial and personal time, it is important to explore debt relief options. It might not seem like an ideal step to take, but filing for bankruptcy could help an individual overcome their growing medical debt. Bankruptcy is not just for those struggling to pay their mortgage, facing foreclosure or downing in credit card debt. At Mark T. Young & Associates, our law firm is here to help those in the Chattanooga area navigate their financial problems.

Manage medical debt with the help of an attorney

Not long ago this Tennessee-based bankruptcy and debt relief blog posted an article about Americans' fears of incurring medical debt. The fear that some people experience is so high that they would actually prefer to deal with their medical problems on their own than to expose themselves to the incredibly high costs of health care in hospitals and other facilities. This can cause some who need the help of medical professionals to avoid seeking the care they need to heal their bodies and remedy their ailments.

Their fears are not without cause, however. Medical debt is a real problem for many people, and many who carry it with them incurred it for reasons they did not anticipate. They may have been involved in accidents that blindsided them, or they may have suffered unexpected illnesses that kept them under their doctors' care and out of work. However they amassed their debt, those who have medical debt understand the great burden that it imposes on their lives.

Paying the minimum makes for slow progress on credit card debt

Credit card debt is not just a problem for the very young. In fact, according to one study, American households carry an average of around $6,000 in credit card debt at any given time. This means that many men and women in and around Chattanooga are struggling with overwhelming balances on their credit cards as they read this post.

There are different ways of approaching credit card debt in terms of how fast a person wants to or can pay down their balance. If a person is able to pay more than their minimum payment, then their balance will come down faster, and they won't have to pay as much in interest as someone who pays only the minimum. On a balance of about $6,000 with an interest rate of just under 15 percent, it would take a person more than 14 years to pay off their back debt.

Why might Chapter 13 be a better option than Chapter 7?

Filing for bankruptcy is a big decision for any Tennessee resident, and the contents of this post are offered to inform readers of some of the different ways that the two most common forms of individual bankruptcy serve different interests. This post is not offered as specific advice on how individual readers may benefit from Chapter 7 bankruptcy and Chapter 13 bankruptcy; readers who wish to learn more about their individual bankruptcy options are encouraged to discuss their questions with their trusted bankruptcy attorneys.

In some cases, a person may not be able to qualify for Chapter 7 bankruptcy and, for that sole reason, Chapter 13 bankruptcy may be their only option. If, for example, an individual makes too much money they may not be able to use the protections of Chapter 7 to achieve their bankruptcy discharge.

How to determine which bankruptcy option is best

Like most Tennessee residents, you're likely no stranger to fluctuating economic situations. Most people experience some type of ebb and flow with their finances, especially if they encounter unexpected changes in life or crises. Maybe you switched jobs and your new income doesn't quite yet match up to your expenses and cost of living. Perhaps you're going through a health crisis that requires specialized medical treatment and is causing temporary debt.  

The good news is that most financial problems are, in fact, temporary. A key to resolving them is to clearly understand what options are available and make informed decisions as to which course of action best fits your particular needs and ultimate financial goals. More good news is that there are support networks in place to help you if you're unsure which route to take. If you're considering filing for bankruptcy, it's best to gather a basic understanding of the differences between Chapter 13 and Chapter 7 before taking action. 

Unpaid medical bills can grow over time through interest

One of the advantages of saving money in a managed account is that it may, though no work of the contributor, grow over time due in part to the application of interest to the included funds. Many financial institutions incentivize the use of their accounts by offering consumers attractive interest rates that may help their money grow. That is to say, by giving a bank one's money, a Tennessee consumer is effectively giving the bank a loan on which interest is paid by the institution.

The same holds true when a person takes out a loan or acquires a debt. However, instead of receiving income for lending their money to someone else, the consumer finds that they must pay interest on the money they have received from the other party. Interest can make debts get bigger, and this is very true when it comes to medical debt.

How do I qualify for Chapter 13 bankruptcy?

This Tennessee bankruptcy and debt relief blog has offered numerous posts on the benefits that bankruptcy can offer to men and women who are struggling with debt and unsure of how to get ahead in their financial lives. However, a person cannot simply decide to pursue bankruptcy and have their matter automatically accepted by the courts. In order to begin a Chapter 13 bankruptcy, for instance, a person must first legally qualify for the process's protections.

In order to qualify for this particular form of bankruptcy a filer must be an actual person as opposed to a business organization like a corporation. While this may seem like an obvious requirement, it is important for the reader to remember that businesses can take on legal statuses under the law and therefore can have rights; filing for Chapter 13 bankruptcy, however, is not for these sorts of organizations.

Do military service members get any extra help with their debts?

Men and women who have served in the United States military have provided this country with dedication and commitment that is matched like none other. Many Tennessee residents have given years of their lives toward providing their fellow countrymen with safety and security from threats both foreign and domestic as members of the Army, Navy and Air Force.

This is why active service members, who struggle with financial problems just like everyone else, may in recognition of their service be able to find extra support when it comes to dealing with their debts.

It may get easier to discharge student loans through bankruptcy

Many Chattanooga residents take out student loans in order to finance their higher educations. However, at present it is very difficult for Tennessee residents who hold federal student loans to eliminate those burdens in bankruptcy. That is because in order to do so, a debtor must show that the repayment of their student loans subjects them to undue hardship. The biggest problem in accomplishing this is that the government has never clearly explained what an "undue hardship" in this context is.

An undue hardship in this area of bankruptcy law has generally been understood to mean a person could not meet their basic needs and make their payments at the same time. However, the undefined nature of the term has made it next to impossible for men and women swamped with student loan debt to get out from under their burdens with bankruptcy.

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

Toll Free: 888-376-0282
Phone: 423-933-1606
Fax: 423-877-0363
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