Chattanooga Bankruptcy Law Blog

Deciding to file for bankruptcy and to utilize the protections of the bankruptcy courts should not be done capriciously. A debtor must fulfill significant commitments in order to complete the process and to avoid further financial and legal issues that may result if they elect not to take their obligations seriously. A general overview of what debtors may face if they begin the Chapter 13 process can be useful for our readers.

One of the first commitments that Tennessee residents will face when they begin the Chapter 13 process is the requirement that they pay a filing fee. The fee may be paid in full or the debtor may be able to secure a payment plan that spreads the fee out over a period of time. If the fee is not fulfilled within a statutorily set period of time the debtor's case may be thrown out.

"Straight bankruptcy" is just another name for Chapter 7 bankruptcy and the process that goes along with it. Readers of this Tennessee debt relief and bankruptcy blog may know Chapter 7 bankruptcy to be the process of liquidating one's personal assets in order to pay off creditors and attain financial freedom.

Unlike Chapter 13 bankruptcy, which involves long-term financial planning and using one's income to pay off debts, Chapter 7 bankruptcy gets straight to the point of resolving a debtor's issues by wiping out debts in a one-time transaction. The proceeds of a liquidation sale are applied to the debts that the individual has to their creditors and in the end the debtor is released from the financial obligations that were tied to their bankruptcy discharge.

An unexpected illness or accident can result in a Tennessee resident spending time with their doctors and not at work. As a result, a number of individuals who incur medical costs find themselves facing significant debt when their bills begin to arrive. According to a study on medical debt, the presence of such debt in a person's life can have serious and long-term consequences.

According to the Kaiser Family Foundation and the New York Times study, about one out of every four Americans who incurs medical expenses has trouble paying those bills off. Of those who struggle to pay down their medical debt, nearly 90 percent of individuals claimed that their debt had a major impact on their families' lives. This includes individuals with and without health insurance.

It is easy to assume that if a person wins the lottery that they will be set up for financial success for the rest of their life. In fact, if a Tennessee resident wins big and pockets millions of dollars in a lottery windfall, then they may foresee a future where their children, grandchildren and other descendants may live without any economic concerns. However, this is often a fallacy. Many lottery winners end up filing for bankruptcy due to financial mismanagement, unwise investments and victimization by unscrupulous individuals.

A recent study adds to this phenomenon, though, by finding that the neighbors of people who win the lottery also have higher than average bankruptcy filings. There are different hypotheses for why this might be true, but it seems easy to follow that individuals want to "keep up with the Jones's" and live the same lifestyles as their newly rich neighbors.