For Tennessee residents who are experiencing financial challenges, Chapter 13 bankruptcy could be a reasonable alternative to get back on solid financial footing. Before moving forward with filing for Chapter 13, however, it's important to know how the entire process works. The case will start when the individual files a petition with the court. The person filing the petition will also have to inform the court of the following: assets and liabilities; expenditures and current income; executory contracts and unexpired leases; and a statement detailing financial affairs.
It's not uncommon for people in Chattanooga to run into financial challenges because of credit card debt. Credit card debt can accumulate in a number of ways. Perhaps there was a frivolous use of credit to buy things that really weren't needed and the irresponsibility led to issues paying the debt. Or, there might have been unexpected events that made it necessary to use a credit card to pay for them and the aftermath is causing a problem paying all the credit cards. Before new rules were implemented, consumers were at the mercy of credit card companies. That changed when the CARD act was enacted.
There are very few Tennessee residents that have not had to use a credit card at some point in their lives. Everyone can fall on hard financial times and gets stuck using credit to buy essentials. When the economy turned south, many people wound up only be able to afford the minimum balance. Unemployment, high cost of living and plummeting home values have all contributed to the crisis.
Those Tennesseans who are struggling with overwhelming debt are not alone. In fact, a recent study conducted by the Urban Institute and Encore Capital found that more than one-third, 35 percent, of Americans who have credit files have debt that has been turned over to collection agencies. That's 77 million individuals. The study assessed non-mortgage debts like medical expenses and credit card bills that were so overdue that the account was handed over to collections. The median amount in collections is more than $1,300, a significant amount. Of course, many face much higher debt amounts that can leave them financially debilitated.
Those in Tennessee who have filed for bankruptcy or are considering it often have many concerns. Amongst them is how bankruptcy will affect one's credit. While it is true that bankruptcy will negatively impact an individual's credit score, it is not a mark that will doom an individual to a lifetime of financial ruin. In fact, there are many steps that can be taken after declaring bankruptcy that might help rebuild one's credit.
Credit card debt can be scary. Those who relied on them in a time of need can quickly be subjected to creditor harassment and even wage garnishment. In many cases, these debtors had no choice but to turn to credit cards. Unemployment, a sudden decrease in wages, a new medical condition, or another unexpected life event can leave them strapped for cash with nowhere to turn but their plastic. Though they may not have had an option in doing so, they do have options when it comes to finding debt relief.
Many Tennesseans try to handle their debt responsibly. They attempt to make payments on time, pay debt off in a timely fashion, and communicate with their creditors when necessary. However, life is always unexpected, and sometimes unexpected events throw a wrench in our financial planning. An unexpected illness, job loss, or wage cut can all leave an individual facing tough financial challenges. However, there are other debts that may be thrust upon an individual in surprising fashion, leaving him or her desperate for help.
As college tuition and the cost of living continue to rise, more and more Americans are finding themselves with overwhelming student loan debt. With high interest rates, these debts can quickly spiral out of control and leave a borrower stressing over whether or not he or she will even ever be able to afford to pay it off. When such personal debt creates extreme financial challenges, these individuals may find themselves asking if they can discharge their student loans through bankruptcy.
As the economy seems to be slowly gaining traction, it may be easy to think that the debt load of people in Tennessee and around the country is getting lighter. This positive feeling can be buttressed by the fact that Americans paid off $32.5 billion in credit card debt last quarter. However, though that number may be impressive, that figure is less than the amount of credit card debt that was paid off by Americans at the end of the recession. In fact, Americans are expected to collectively accumulate $42 billion more in credit card debt by the end of this year compared to last year.
Many Tennesseans live in fear of losing their home, and with the sluggish economy and the financial challenges faced by many, it is understandable. The thought of foreclosure can be terrifying, leaving a family not knowing what they will do next. While this fear can be paralyzing, those with overwhelming debt and facing foreclosure should dissuade themselves from inaction.