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Chattanooga Bankruptcy Law Blog

What is the means test of Chapter 7 bankruptcy?

Different paths to bankruptcy relief exist because not all individuals experience the same financial challenges and difficulties. As such, a Tennessee resident who is confronting significant financial hardship may elect to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy. If they wish to pursue Chapter 7 as their method of overcoming their debts they must qualify for the process by passing the legal process's means test.

The means test is a careful examination of the debtor's income and financial expenditures. First, the debtor must disclose their sources of income and other routes through which they may get money. To pass the first portion of the evaluation, their median intake for the six months prior to their filing for Chapter 7 bankruptcy has to be below that of the state median. If it is not then they must move onto a second level of evaluation.

An explanation of Chapter 13 debt discharge

Tennessee residents use the bankruptcy process to alleviate burdensome and sometimes overwhelming debts that they accumulate over time. For individuals who earn steady incomes, Chapter 13 bankruptcy can be a useful tool. It allows debtors to create repayment plans through which they identify their debts and creditors, then reorganize the way that they spend their income so that they can, over time, repay the money that they owe to others.

When a repayment plan is completed the debtor may receive their discharge. A bankruptcy discharge not only releases a debtor from their obligations to the creditors who were included in their repayment plan, but also prevents those creditors from pursuing the debtor for the same debts that were included in the plan. It allows a debtor to move past their debts and to start their financial future on more solid footing.

Common mistakes when facing overwhelming debt

Being in debt seems like a normal part of adult life. From the time you were in high school or college, you may have had a credit card, then student loans, perhaps a car payment and eventually a mortgage. As in many households, most of your paycheck may go to paying debt, and you may even find yourself acquiring more credit card debt to get yourself through the rest of the week.

If bills that once seemed normal are now an overwhelming burden, you may be feeling a little desperate. The paycheck isn't stretching as far as it used to, or perhaps you have had a major setback, such as a job loss or medical expense. If you are looking for ways to reduce the amount of debt you are paying, you may be willing to take ill-advised chances. In fact, there are some steps financial advisors recommend you never take to pay down your debt.

Out of network medical care can lead to exorbitant medical bills

Tennessee residents who have health insurance may be familiar with the concept of "in-network providers." If a doctor, hospital, or medical office is in-network, then that provider has a contractual relationship with the patient's insurance carrier. Insurance companies often prefer their customers to see in-network providers because it makes assessing insurance coverage and payments more streamlined.

However, in cases of emergencies, individuals may find themselves receiving treatment from out-of-network medical providers. If a person sees an out-of-network provider, then their insurer may not cover any or all of their medical bills. This can leave patients with incredible medical expenses that can quickly become medical debt if they cannot pay it off.

Can I stop harassment about my credit card debt?

If a person falls behind on their payments for a financial obligation, such as credit card debt, they may receive notices from the lender who has backed the delinquent obligation. Hamilton residents may receive letters, phone calls, and emails about the status of their debts, as well as requests for payments. Some communications from creditors are permissible; others that are harassing are not.

The Fair Debt Collection Practices Act prohibits creditors and lenders from engaging in certain practices. For example, creditors are not allowed to contacted debtors in the middle of the night; they must limit their communications to between 8:00 in the morning and 9:00 at night. They may not make repeated calls to their debtors with the intent of harassing or annoying them.

What information must be included in Chapter 13 filing?

Before a person files for bankruptcy, they must take the time to get organized and collect the necessary documents to provide to the bankruptcy court. Tennessee residents who wish to use Chapter 13 bankruptcy to get out from under overwhelming debt should be prepared to offer extensive documentation of their finances, both positive and negative, as well as information on the parties to whom they owe money.

For example, a person pursuing Chapter 13 bankruptcy will have to give the bankruptcy court schedules that outline their sources of income and the expenses they have, as well as the assets that they possess and the debts or liabilities that they carry. They will have to prove that they have completed a credit counseling requirement and also show any prospective raises or increases in income that they may experience in the future.

What debts will I still have to pay off after Chapter 7?

It is a common misconception that achieving a bankruptcy discharge will wipe out all of a Tennessee resident's outstanding debts. In fact, a number of debts will survive the bankruptcy process and will remain liabilities for the individual to repay even after they have successfully completed the legal process. This post will discuss some of the debts that will endure a Chapter 7 bankruptcy discharge but readers are reminded that it is not exhaustive. Consultation with a bankruptcy attorney should be sought for case-specific advice.

One category of debts that will last through a Chapter 7 bankruptcy are ones that the debtor forgot to include when they initially filed for Chapter 7 bankruptcy. If a debt is not included in the debtor's schedule of debts then it is not subject to discharge when the debtor ultimately gets to the end of the bankruptcy process.

Relief for debtors of any age

Last week's post on the challenges young people face to pay off their medical debt is a good reminder to readers of this Tennessee bankruptcy and debt relief blog that financial hardship is a problem that anyone can experience. It is a mistake to believe that debt is only something that grows over time and afflicts those who fail to use financial caution in the youth: from young adults to retirees, debt is a hardship that can cause problems for individuals of all ages.

The loans and advances on credit that individuals take as young adults can, if not paid off in a timely manner, become issues that they must attempt to overcome even before they have truly started their careers and established their financial footing in the world. Just as bad investments and unexpected life changes may cause economic problems for older adults, men and women just starting out in the world can find themselves struggling to keep their heads above water when money problems strike.

Have you considered these bankruptcy benefits?

Most Tennessee residents might agree that there are basically three kinds of people regarding finances: those who love to talk about all things financial, those who cringe at the mention of the word and those who would rather think about other things but recognize the necessity of creating a solid financial foundation for themselves and their families.  

You might fall somewhere in between these categories. If extenuating circumstances in your life have sparked a financial crisis, getting things back on track is likely one of your highest priorities now. You'll be glad to know that most financial problems are resolvable. Finding the right solution to help you accomplish your goals often hinges upon the type of support you obtain. If you're considering filing for bankruptcy, you'll also be glad to know there are several potential good reasons for doing so. 

Young adults slammed by crippling medical debt

Different generations have been assigned different names to differentiate them from one another. For example, Tennessee residents who were born in the two decades following World War II may be considered Baby Boomers, while individuals born during the Civil Rights Era through the mid-1980's fall into Generation X. The most recent generation to be named, the Millennials, is comprised of individuals born during the early to mid-1980's through the first few years after the turn of the millennium. And, according to a recently published study, it is this generation that is suffering significantly from medical debt.

There are a number of reasons that Millennials may be burdened by medical expenses. One reason is that many of them may have recently lost their medical insurance coverage after being dropped by their parents. Generally, young adults who meet certain conditions may stay on their parents' health insurance policies until they reach the age of 26.

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

Toll Free: 888-376-0282
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