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Chattanooga Bankruptcy Law Blog

What is a debtor required to do under Chapter 13?

Although bankruptcy can be a useful legal process for changing the course of a debtor's financial health, it is not an easy thing to complete. When a Tennessee resident files for Chapter 13 bankruptcy they take on a number of requirements that must be met in full in order for them to reach the end of the process and receive their debt discharge. If they do not fulfill all of their obligations under the scheme they may lose their opportunity to reach the discharge phase of bankruptcy.

For example, a debtor who files for Chapter 13 bankruptcy must file a significant amount of paperwork with the bankruptcy court. They must provide tax returns and their proposed repayment plan, as well as documentation that they have completed their credit counseling course. Other documents may be required, and readers are reminded that this post is not offered as legal advice.

Country's total credit card debt stands at $870 billion

Most people are not surprised when someone advises them not to rake up too much of debt on their credit cards, as repaying an enormous credit card debt can often bring about significant financial challenges. It seems, however, that many Americans, including many in Chattanooga and Hamilton, have been forced to turn to credit cards to get by. The result is that at the end of the fourth quarter of 2018 nationwide credit card debt stood at a staggering $870 billion.

Many people have seen reports about the high dependency of Americans on credit cards, especially during and after the financial downturn of 2008. But what makes this latest debt figure interesting is that this $870 billion is almost 83% of the total revolving debt of $1.05 trillion that exists in the country. A major contributing factor was a rise of $26 billion in debt during the last quarter of 2018 alone, which is the highest quarterly increase among all the different categories of household debts in the country.

Medical debt is a problem for many Tennessee residents

There are many events in life that individuals can successfully plan for. With consideration and time, some people can put enough money away to eventually leave their jobs and retire. Others may be able to save some cash so that they can help their kids or grandchildren through college. When money is tight, though, saving may be a luxury that may be unachievable.

Living paycheck-to-paycheck is a reality for many Chattanooga residents, and those who do not have the means to get ahead financially can be set back significantly when emergencies arise. For example, when an accident or sudden illness occurs, these individuals may not have the means to pay their medical bills to relieve themselves of the burden of medical debt.

Are you facing financial troubles that include tax debt?

In the past, you may have considered yourself someone who handles money well. Now, you wonder whether having that idea was correct because you have landed on hard financial times. Before you start beating yourself up, you may want to remember that numerous people face financial difficulties and accrue substantial amounts of debt, and you have options for effectively addressing that debt.

You may have been thinking about filing for bankruptcy for some time because of the depth of your debt. However, you may have felt hesitant to file because you have tax debt and were unsure whether bankruptcy could help. Fortunately, if your situation meets certain criteria, you may have the chance to have your tax debt discharged.

How can bankruptcy help create manageable payments?

Each type of bankruptcy offers Tennessee debtors different options for rebuilding their financial health. Whereas Chapter 7 bankruptcy involves the liquidation of a debtor's assets to pay off their loans and creditors, Chapter 13 bankruptcy uses a debtor's income to create a plan for the repayment of their obligations. It is important that debtors choose the right bankruptcy strategy for their individual needs.

Chapter 13 bankruptcy is the form of bankruptcy that allows individuals to create manageable payments for the repayment of their debts. During their Chapter 13 bankruptcy proceedings, individuals offer repayment plans that identify their debts and their disposable income. They may spread those payments out over time, and not all of their debts may be included in those plans.

Not everyone can file for Chapter 7 bankruptcy

Bankruptcy is a serious legal process that requires individuals to meet significant mandated tasks in order to eventually reach debt discharge. Those who file for Chapter 7 bankruptcy must agree to sell off some of their assets through liquidation in order to acquire enough money to pay off their creditors as fully as possible and work through their bankruptcy processes. In order to use Chapter 7 bankruptcy and its liquidation requirement Tennessee residents must first qualify for it.

Some individuals may be denied the chance to use Chapter 7 bankruptcy if their incomes are too high. Chapter 7 is generally reserved for those who do not have the discretionary income to put toward paying down their debts, and those debtors who can reorganize their income and debts so that repayment is an option may have to use Chapter 13 bankruptcy instead of Chapter 7.

Tennessee first in the nation for medical debt bankruptcies

Tennessee is known for many of its positive attributes. Nashville is a hub in the music world, and the state's natural beauty draws visitors from across the nation each year. However, despite the many great things that Chattanooga residents know about their home state, there is one fact that may both surprise and sadden them: Tennessee ranks first in the nation in medical debt bankruptcies.

According to one study, more than 70 percent of individuals who live in Tennessee carry some form of medical debt. While not all medical debts are crippling, they can become burdensome when individuals cannot come up with the money to pay them off in a timely manner. When families are forced to decide between paying down medical debts and putting food on their tables, it can be hard to come up with arguments to push resources into debts that are not going to go away.

Why is Chapter 13 called reorganization bankruptcy?

Not all forms of bankruptcy are available to all debtors. While some bankruptcy options are available to individuals, others are only open to certain types of corporations or businesses. For Tennessee residents who wish to use bankruptcy to overcome their financial hardships, there are two main formats that are typically used: Chapter 7 bankruptcy and Chapter 13 bankruptcy.

Chapter 7 bankruptcy involves the liquidation of personal assets so that a debtor may repay their creditors for their outstanding loans and obligations. Chapter 13 bankruptcy, however, involves the use of a debtor's disposable income to repay creditors over time. Because the debtor in a Chapter 13 bankruptcy must submit a plan to their bankruptcy court that details how they will use the money they are making to satisfy their debts and liabilities, they effectively reorganize their finances to pay off what they owe to others.

Can credit card companies raise APRs?

A credit card can be an important tool in a Tennessee resident's financial plan. While cash can be used to make some small and moderately-sized purchases, it is often the case that individuals use their credit cards to make larger purchases so that they do not have to carry around excessive amounts of money. Also, credit cards help consumers facilitate online buying since they may be easily used during electronic transactions.

However, the misuse or emergency use of a personal credit card can get an individual into trouble. When an individual charges more than they can pay off, they may find that their balance will start to grow due to the interest that is charged to them. That interest is based on the annual percentage rate (APR) of the card. Under the CARD Act there are rules on when credit card companies may raise APR's.

Hiding your vehicle from repossession may add to your troubles

Owning a car is essential for most people. It is how they get to work, take their kids to appointments and manage dozens of responsibilities throughout a normal week. Without a vehicle, you might be in the embarrassing situation of having to bum rides, borrow vehicles or use public transportation.

If you have fallen behind on your car payments, you may be worried that you could end up in just such a circumstance. Since auto loans typically use the vehicle as collateral, it is common for lenders to initiate the repossession process relatively soon after you miss a payment. You certainly don't want to face the humiliation of a repossession, but is hiding your vehicle the best way to avoid this?

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

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