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Which is better: personal bankruptcy or debt repayment?

One of the most difficult decisions for many people struggling with debt problems is whether to file for bankruptcy or establish a debt repayment plan. The decision is not an easy one to make and the answer often depends on the unique circumstances of the individual debtor. Tennessee families currently struggling to repay debt might be interested to learn more about their options.

One of the major benefits to filing for bankruptcy is that the process can provide immediate relief. Filing for bankruptcy brings an immediate end to the harassing telephone calls from creditors and other collection efforts. The process also immediately stops any wage garnishment. In addition, bankruptcy exemptions exist that can help a family keep their car, home and other essential personal property. For many households struggling with debt, it's beneficial to know that they may be able to keep their home through the process.

On the other hand, some individuals fear that filing for bankruptcy can do irreparable damage to their credit score. Bankruptcy can remain on a person's credit record for up to 10 years. It is possible, however, to repair credit records after the bankruptcy process by keeping debts under control and meeting regular financial obligations.

Furthermore, it is important to understand that there are certain debts that cannot be discharged. One large source of debt for many is student loans, which cannot currently be discharged. In addition, back taxes, child support and alimony will be cleared through bankruptcy. For those in Tennessee facing these types of debts, it may be important to consider whether filing will have an impact on their overall condition or whether it may be best to negotiate with creditors to repay their debts.

Even with certain non-dischargeable debt, filing for bankruptcy can be beneficial by freeing up cash to manage finances while taking advantage of exemptions provided under federal and Tennessee's state laws. It is also important to know that there are different types of bankruptcy. Understanding what type of bankruptcy is the best option requires careful consideration. The specific type of bankruptcy may also effect what items are exempt.

The important thing to remember is that each debt relief option has unique features that may not best suit every person's financial situation. Regardless, there are ways for Tennessee families to clear their debts and find a secure financial future.

Source: Fox Business, "Decision Points: Bankruptcy vs. Debt Payment Plan," June 27, 2012

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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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