Filing for bankruptcy in Tennessee can provide much-needed relief for individuals struggling with overwhelming debt, including personal loans and payday loans. These types of debts are generally considered unsecured debts, meaning they are not tied to specific collateral like a house or car. Because of this classification, bankruptcy can often help eliminate or significantly reduce them.

Personal Loans in Bankruptcy

 In both Chapter 7 and Chapter 13 bankruptcy, personal loans—whether obtained from a bank, credit union, or online lender—are typically dischargeable.

• Chapter 7: Most unsecured personal loans can be wiped out completely, allowing you to start fresh without repayment obligations.
• Chapter 13: These debts are included in your repayment plan, and you may end up paying only a fraction of what you owe before the remaining balance is discharged.

Payday Loans in Bankruptcy

 Payday loans are also unsecured debts and are usually dischargeable in bankruptcy. However, payday lenders sometimes try to claim fraud if the loan was taken shortly before filing. While this does not automatically prevent discharge, it may require additional legal steps to resolve.

Automatic Stay Protection

 When you file for bankruptcy, the court issues an automatic stay, which immediately stops lenders from contacting you, pursuing collection actions, or taking money from your bank account. This protection applies to personal loan lenders, payday loan companies, and all other creditors.

Key Considerations

• If you recently took out a payday loan or personal loan, the timing of your bankruptcy filing matters.
• Bankruptcy may not erase debts obtained through fraudulent means.
• An attorney can review your financial situation to ensure all debts are handled correctly.

At Kenneth C. Rannick P.C., we help individuals in Chattanooga understand how bankruptcy affects their personal and payday loans, guiding them toward a financial fresh start while protecting their rights throughout the process.