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Chapter 13 allows debtors to escape debt and save for retirement

Tennessee residents know that debt can sometimes be a real problem. Sometimes, debts from mortgages, auto loans and credit cards build up to the point that debtors have a hard time making ends meet. Add financial challenges from unemployment and serious medical conditions to the mix, and consumers can be pushed to the breaking point. This was especially true when the Great Recession started. For those who want to retire in the near future, these challenges can affect retirement plans in significant ways.

A recent Wells Fargo survey of middle-class Americans found that 48 percent of respondents were not confident they would have a comfortable retirement because of a lack of savings. For some people, monthly bills minimize their retirement savings. Of those surveyed, 42 percent felt they were unable to both pay their debts and put money into a retirement account. In addition, almost 60 percent of respondents stated paying bills was their first priority above saving for retirement.

It turns out that paying bills on time may seem like a good practice, but it can affect or derail retirement. If retirement is only years rather than decades away, the choice becomes paying off debts completely before adding to retirement accounts or setting aside retirement money while still trying to pay off debts as fast as possible. For many people this is achievable.

For people who are struggling with insurmountable debt, however, Chapter 13 bankruptcy may be a better solution. Filing for bankruptcy is a wise decision for people who are unlikely to ever pay their way out from under debt. This legally sanctioned option allows debtors to resolve debt and start over. For someone looking at retirement in the near term, this makes perfect sense.

Tennessee residents can file for Chapter 13, reorganization bankruptcy, to settle their debts and get a fresh start. Debtors may want to consult a legal professional to find out more about which type of bankruptcy best fits their situation.

Source: Dailyfinance.com, "Is 'good debt' running your chance of retiring," Adam J. Wiederman, Dec. 4, 2013

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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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