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Bankruptcy filings dropped in Tennessee though more use Chapter 7

Chatanooga residents may be interested to know that as the economy improves, it seems that bankruptcy filings are down across the state. However, for those still struggling, bankruptcy may be more necessary now more than ever.

It appears that all three forms of Bankruptcy filings decreased slightly in the state of Tennessee. Though the study was limited to a small part of the state, it appears to be a trend across the entire region. It appears however that in reference to personal bankruptcy, Chapter 13 bankruptcies dropped more while Chapter 7 bankruptcies actually rose. The reason for this appears that when filing for Chapter 13 bankruptcy, the debtor mush show the taking in of some income to be able to pay back creditors over a certain amount of time, either three or five years. In a Chapter 7, the debtor does not need to show income and usually has all of their debts eliminated, instead of paying them back.

It is important to know the difference between the forms of bankruptcy, in order to know which will be the most useful. While all forms will stop foreclosure at least temporarily, a Chapter 13 bankruptcy is more likely to help save a home. This is because Chapter 13 bankruptcy has a plan that lasts either three years or five years and the arrears that are owed on the house can go into that plan. A Chapter 7 will temporarily pause the foreclosure via the automatic stay, but does not include a method to payback the arrears. It may help to give some breathing room to be able to work out a deal with the lender, but the lender is under no obligation to do so. Chapter 7 bankruptcy is typically used to get rid of credit card debt, medical expenses and other unpaid bills that the debtor can no longer handle.

Getting help with debt relief is often a difficult process for any debtor. However, filing for bankruptcy is a sure way to be able to get a fresh start.

Source: The Daily News, "Bankruptcies Dip Slightly as Economy Improves," Jennifer Johnson Backer, April 19, 2013

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

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