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Tennessee sees most non-business bankruptcies in United States

Whether the cost of living in Tennessee is less than other states is up for debate, but the low cost of labor itself has attracted many international and national companies to set up business in the state. Unfortunately, low wages often mean employees live on the edge financially.

What is not disputed, however, is that Tennessee now leads the country in the number of non-business bankruptcies, according to one consumer finance firm. With 6.22 filings for every 1,000 residents, Tennessee's rate was followed closely by Alabama and Georgia. Although the 2014 rate is nearly 2.5 times the national average of 2.7 filings for every 1,000 Americans, it is still down 3 percent from the state's 2013 filing rate.

In most cases, the legal and social pundits found bankruptcy filings were caused more by low-wage employment rather than unemployment. Without enough household income to get past just paying monthly bills for necessities, many Tennessee residents use credit cards to pay basic expenses, thus getting caught in a downward spiral that not only adds principal but also penalties and interest, which is compounded every month.

Even though many of those who file for bankruptcy work full-time, they are unlikely to ever be able to repay their debts without making significant lifestyle adjustments, many of which would be nearly impossible to sustain for long. In such cases, filing for bankruptcy can help debtors come up with realistic repayment plans that can help them out of their situations. In many cases, creditors are willing to discuss repayment plans because they otherwise risk receiving nothing at all from debtors.

Source: DNJ.com, "Young gun: Tennessee tops nation in bankruptcies," March 20, 2015

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Kenneth C. Rannick, P.C.
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Chattanooga, TN 37411

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