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Chattanooga Bankruptcy Law Blog

What does foreclosure have to do with a home?

One of the biggest assets that a Tennessee resident may work toward owning is their own home. Buying a house where a person can live with their spouse and raise a family is a huge financial step for anyone who has struggled to pay their bills and save enough to make a down payment. Just getting into the housing market can seem like a major battle for some people; once in, though, homeowners face many challenges, some of which may threaten their rights to continue to own their properties.

Most people cannot buy real estate outright, and as such they secure mortgages to buy their homes. A mortgage is a loan for the purchase of a home and once a mortgage is approved a person generally must pay a certain sum of money to their mortgage holder each month in order to pay off the outstanding sum.

Emergency room costs soar, may lead to medical debt

When accidents happen and Tennessee residents cannot wait to see their regular doctors, they may need to make trips to the emergency room to have their ailments treated in a timely manner. These trips are usually reserved for situations in which there are no other options and holding off on medical assessment may be detrimental to the suffering individual. However, recent reports indicate that emergency room visits across the country are being charged at much higher rates than they were just a decade ago.

This is because medical centers are tacking on "facility fees" that are generally charged to clients just because they walked in the doors of the emergency room. Even if patients use in-network providers and have insurance for the medical needs, they may still receive medical bills in the hundreds and even thousands of dollars.

Know your options for a pending business bankruptcy

Recently a major American retailer shut its doors and ceased operations at its stores throughout the nation. Toys "R" Us had been in business for decades before attempting to use bankruptcy to revitalize its sagging bottom line and save itself from extinction. However, any Tennessee resident who has tried to visit one of the company's stores in the last week would have found that all retail centers for the former megastore are now closed.

Toys "R" Us elected to file for Chapter 11 bankruptcy, the path many businesses use to reorganize their debts and to restructure the means through which they will pay those debts off. It failed, however, and ultimately the company had to resort to Chapter 7 bankruptcy. Chapter 7 bankruptcy operates for businesses the way it operates for private consumers; the debtor's assets are sold off and creditors are repaid with the proceeds of the liquidation.

Why didn't Chapter 7 bankruptcy eliminate all of my debts?

The goal of any bankruptcy process is for a debtor to emerge from the process without the burdensome debts they carried prior to filing for bankruptcy protection. Whether they file for Chapter 13 bankruptcy and develop a repayment plan to satisfy their creditors or Chapter 7 and use liquidation to pay down their obligations, debtors hope to attain discharge and find financial freedom.

A Tennessee resident may find, however, that after attaining discharge through the Chapter 7 bankruptcy process certain debts still exist as obligations for them. While Chapter 7 bankruptcy does grant a debtor a wide range of support to eliminate certain obligations, others live through the process and remain the responsibility of the individual who filed for Chapter 7.

What to consider before filing for bankruptcy protection

It can be hard to admit when a person has lost control of their finances. An emergency or unexpected event can throw a wrench into a person's plans and destroy their savings in a heartbeat, or over time a person may slowly erode their nest egg due to bad investments and spending choices. However a Tennessee resident finds themselves in the difficult place of considering bankruptcy, there are a number of topics they should evaluate before deciding to jump into the process.

First, before a person elects to file for bankruptcy, they should be sure that there are no other ways that they could alleviate their financial woes. For example, if making changes to their spending habits or moving money into more secure accounts could help them dig their way back "into the black" without bankruptcy, it may be more effective for those options to be exercised in lieu of bankruptcy.

What happens after a Chapter 13 bankruptcy discharge?

Seeking financial freedom through bankruptcy is a big step that many Tennessee residents decide to take to improve their economic standing. Most individuals elect to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, two different processes that are available to individuals through different qualifying requirements. In the end, however, individuals who file for either form of bankruptcy hope to arrive at the process's terminal event: debt discharge.

If a debtor reaches discharge through bankruptcy, it means that their qualifying debts have been eliminated. Our readers should note that not all of a person's debts may be eliminated through discharge. In Chapter 13 bankruptcy, a number of different types of debts and loans may survive and may continue to be the responsibility of the party who received discharge.

Important terms for understanding debt

Not long ago, a popular consumer website surveyed individuals who carry student loan debt. The survey asked participants to recognize certain terms associated with debt and, surprisingly, more than 9 out of 10 of the participants failed the questionnaire. What this means is that many Tennessee residents who incur debts do so without fully understanding the terms and associated conditions that go along with their repayment.

For example, when acquiring a debt, a person should know what the principal is. Generally, the principal is the base value of a loan. If a person borrows $10,000 to buy a car, then the principal amount of their loan would be $10,000.

Why is mortgage debt considered a "secured" debt?

Buying a home can be an exciting and scary time for a Hamilton resident. While on one hand it can be liberating to break out of the cycle of renting and move into a home, on the other it can be terrifying to take on a large amount of debt in the form of a mortgage. "Mortgage" is the term given to the loan that a person secures to purchase a residence and, as most people cannot buy homes outright with cash, taking on a mortgage is common practice for individuals across the nation.

Imagine that a person wishes to buy a home that costs $300,000 and that they have $60,000, or 20 percent, of the purchase price to put toward the sale. After accounting for the money they need to put toward the home, the person would still need $240,000 more to cover the cost of the house. They would secure a loan around that amount to cover the cost of the balance, plus other fees, and that loan would constitute their mortgage.

Income considerations for Chapter 7 bankruptcy

Readers of this Tennessee-based bankruptcy legal blog may not be aware of the fact that different bankruptcy proceedings have different eligibility requirements. With regard to Chapter 7 bankruptcy, a debtor may not earn too high of an income if they want to use the liquidation process to clear out their debts. The remainder of this post will explore how income is evaluated under the laws of Chapter 7 bankruptcy, but readers are reminded that its contents are not specific legal advice.

Income for the purposes of filing for Chapter 7 bankruptcy includes all standard forms of earnings. These may include, but are not limited to, wages from employment, salary and work-related bonuses, pay for overtime and as tips as well as commissions earned. Income may include earnings from self-driven employment, such as personal businesses or farm work, as well as income earned from rental properties and other investments.

How Chapter 13 can be an effective tool to stop foreclosure

As this blog has discussed on previous occasions, a Chapter 13 bankruptcy works a bit differently than the more commonly used Chapter 7 in that it requires debtors to make and follow through on an approved monthly payment plan. The money from this repayment plan will go to pay all or part of the person's outstanding debts.

One advantage to a Chapter 13 over a Chapter 7, a Chattanooga family may want to consider is that Chapter 13 can be an effective tool to stop foreclosure, should the family be behind in its house payments. While a Chapter 7 can delay foreclosure via what is called the automatic stay, ultimately, a bank or lending institution can simply wait until a Chapter 7 is over and then proceed to take the family's home. The only option for the family is to attempt to negotiate with the bank, but the bank has no obligation to cut the family any kind of break.

Kenneth C. Rannick, P.C.
4416 Brainerd Road
Chattanooga, TN 37411

Phone: 423-624-4002
Toll Free: 800-257-7594
Fax: 423-624-0509
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