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Chattanooga Bankruptcy Law Blog

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.

Dedicated legal representation for personal bankruptcy needs

There are certain events in life that Tennessee residents may wish to face alone. When they feel that they have let others down, or when they feel as though they have a challenge that only they can overcome, they may elect to face their problems on their own. There is one major trial, however, through which individuals may wish to seek professional counsel in order to achieve the best possible outcome, and that is overwhelming debt.

Debt is a problem that only grows over time. If a person cannot get control of it early on they may never be able to chip away at it to pay it off and return to economic balance. The longer that debt is left to its own devices the harder it may be for a person to gain control over it without outside help.

Impact of bankruptcy on finances improves over time

One of the biggest fears that a debtor may have about filing for bankruptcy is the financial challenges they will experience once they have secured their discharge. Despite feeling the crush of overwhelming loans and fees, a Tennessee resident may choose to forego an opportunity to file for bankruptcy because they believe the harm that it will impose on their future is too great. While individuals who file for bankruptcy do often suffer from hits to their credit scores, the challenges they face in the years after their discharge decrease over time.

A recent report looks at how a person's interest rates may be impacted by having filed for bankruptcy. In an example, the report noted that a person who sought a car loan a year after filing for bankruptcy might receive an offer of 10.3 percent on their loan, while a person with no bankruptcy history may be offered a rate of 7.8 percent for a similar loan. That difference in rate would translate to about $2,200 more for the bankruptcy filer than the non-filer over the course of the repayment.

How does Chapter 13 bankruptcy reorganize one's debts?

Tennessee residents may often plan to achieve their goals by getting organized and making a plan to tackle the obstacles that stand in their paths to success. In essence, this is exactly what Chapter 13 bankruptcy does for debtors who have sufficient income to pay down their outstanding financial obligations over time. Through the process of reorganizing the debts and implementing a repayment plan, many debtors can find financial freedom through the protections of Chapter 13 bankruptcy.

Prior posts on this blog have discussed how a person must qualify for this particular form of bankruptcy. They generally must have a threshold level of income and the capacity to assign some income to the repayment of their debts. Once they qualify, though, with the help of a bankruptcy attorney, they may begin to prioritize their debts and reorganize their obligations so that they have a clear picture of just how much money they must pay each month to rid themselves of their economic burdens.

There are advantages to filing for personal bankruptcy

Bankruptcy is a serious legal process that can have long-term financial ramifications on the economic health of those Tennessee residents who choose to pursue it. However, for some, the potential drawbacks of having a bankruptcy on their records may be outweighed by the advantages they experience by ridding themselves of burdensome debts.

This post is not offered as legal or financial guidance, but it is provided as a starting point for readers who may wish to learn more about the many advantages that personal bankruptcy can offer.

Late payments can impact outstanding credit card debt

Making purchases on credit cards is alarmingly easy for many Tennessee residents. This is because when a person swipes their credit card or inserts it into a card reader, they do not see their money leaving their wallet. When they use a credit card, far away an electronic transaction makes a note that the spender will, at a later time, owe their credit card lender a certain amount of money for the purchase they just made.

However, the more a person spends on a credit card, the more that they will have due to their credit card company when their bill arrives. A consumer may discover purchases that they forgot making as they tabulate the magnitude of their bill and contemplate how they will pay it. While some people may elect to only make the minimum payment on their bill and save their balance for another time, others may elect to not pay their bill on time and to hold off until a later date.

Strong representation for Chapter 13 bankruptcy cases

No one wants to talk about their debts. While not all debts are necessarily bad, it is the rare Chattanooga resident who is willing to openly discuss the financial liabilities that they carry and the stresses that they experience due to those unpaid obligations. Most people who live with debt do so quietly and do their best not to draw attention to their financial shortcomings.

However, in some instances debtors cannot remain hidden for long. When their cars are repossessed, homes foreclosed on and assets taken from them, a family's debt problems may go from personal concerns to more public knowledge. Before one's debt problems spiral to the point of losing what they have worked so hard to attain, it can benefit them to discuss their options with a bankruptcy attorney.

Are changes coming for student loan debts in bankruptcy?

Many debts that Tennessee residents carry can be discharged in bankruptcy. For example, a person may be able to successfully discharge their credit card and medical debts through either Chapter 7 or Chapter 13 bankruptcy.

Student loan debts, however, have always been an exception to this rule. Although it has not been impossible to discharge them, the standard by which student loan debtors are judged in bankruptcy is difficult to meet and somewhat unclear.

Could Chapter 7 bankruptcy be right for you?

There is no doubt that for some people, the term "bankruptcy" is a loaded term. It may, in their minds, carry a stigma that suggests that those who use it to manage their overwhelming debts have somehow failed. It is important for readers of this Chattanooga-based bankruptcy law blog understand that bankruptcy is legal, it is important and it is a path that offers individuals choices on resolving their personal financial crises.

Whether a debtor suffers from significant credit card debt, debilitating medical debt, or overwhelming debts related to mortgages or personal loans, bankruptcy may offer an option for financial stability. The two most common types of bankruptcy that individuals elect to pursue are Chapter 13 bankruptcy and Chapter 7 bankruptcy, and each form has its own requirements for eligibility.

Understand foreclosure before it becomes a problem

Paying off one's mortgage is often one of the biggest monthly expenses that a Chattanooga resident confronts. When compared to other fixed costs, such as those associated with utilities, car payments and food, a mortgage can dwarf other payments in outgoing expense. However, when a consumer makes complete and timely payments toward their mortgage they get closer and closer to owning their home outright.

That is because a mortgage is a loan on the home the consumer lives in. Most people cannot afford to pay cash for residential properties and as such they take out mortgages with lenders for the often high balances they have on their properties. Mortgages are often structured to be paid off over the course of one to three decades.

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

Phone: 423-954-7180
Phone: 423-624-4002
Fax: 423-624-0509
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