Lefkovitz & Lefkovitz
Nashville Office 615-686-2279 Cookeville Office 931-400-2218
Serving all of Middle Tennessee's Bankruptcy Needs

Nashville Bankruptcy Law Blog

Avoiding extra debt on Black Friday

Every year, people in Tennessee flock to the stores on Black Friday and head to their favorite websites on Cyber Monday in the hopes of saving money on holiday gifts and other products. While the deals offered on Black Friday can be appealing, they can contribute to ongoing and unrepayable debt. There are a few tips that credit counselors offer to help people resist the temptation to purchase more than they can pay for, even when exceptional savings are on offer. First, experts advise making a specific list and a budget for the items a person wants.

Sticking to a budget can help protect consumers from acquiring more credit card debt by picking up impulse items. After all, the vast majority of people plan to participate in these holiday sales -- 86% according to one study. Stores and websites purposely offer a lot of small items that might inspire people to break the budget with a little impulse here and there. However, the savings can add up, especially as interest charges accumulate on a person's credit card.

How does the repayment period in Chapter 13 bankruptcy work?

Whether your debt has gotten out of control because of a medical condition or because you close the gap between what you earn and your cost-of-living expenses each month with credit cards, excess debt can make your life very difficult.

You may only be able to make the minimum payments on your various debts each month, which means that the balances on your accounts just keep going up despite your ongoing struggle to pay. Bankruptcy can reduce your obligations by giving you a discharge of your unsecured debts, which will likely include your medical debts and credit cards. It also protects you from aggressive collection activity through an automatic stay.

How to effectively deal with business debt

Owning a business is a big responsibility, especially if you have employees who rely on you for a paycheck. While it's natural to incur debt during the course of business ownership, how you manage it will dictate your financial health.

Your goal is to avoid a situation in which you have more business debt than you can comfortably handle. If you fail in doing so, you're not out of luck. Instead, learn more about your debt, including the type and amount, and then make decisions on what to do next.

Medical debt causing older Americans to go bankrupt

Roughly 12% of those who file for bankruptcy in Tennessee and other states are 65 and older. The rate was only 2% in 1991, and there are several reasons why older Americans are doing so more frequently. Generally speaking, older people are less likely to work, which may make it harder to pay their medical bills. Of those over age 65 who file for bankruptcy, 60% do so because they can't afford to repay a medical debt.

Those who file for bankruptcy may also struggle to keep their home or other assets, and that could further complicate their financial situation. A bankruptcy can stay on a person's credit report for up to 10 years. However, it becomes less of a hindrance after a year or two. Individuals who have filed for bankruptcy are encouraged to apply for a secured credit card as quickly as possible.

Bankruptcy may help debtors avoid tax bills

Until 2018, homeowners in Tennessee could cancel up to $2 million in mortgage debt without incurring a tax bill. This was true for those who lost a primary residence through a short sale or foreclosure. However, this perk expired at the end of 2017 and is unlikely to be renewed because of the political climate in Washington. Therefore, those who have a home loan balance forgiven or canceled may need to claim it as income on a tax return.

Filing for bankruptcy can make it possible to have that debt forgiven without triggering a taxable event. However, those who are considering filing for bankruptcy to avoid a tax bill may want to consider the possible consequences of doing so. For instance, individuals can lose any assets that are not exempt under state or federal bankruptcy laws.

Is it even possible to discharge your student loans?

Student loan debt is a burdensome problem for which there is no easy solution. Decades of teaching students that the only real source of upward mobility came from a college diploma has resulted in increased demand for college admissions and a drastic rise in the number of people carrying student loan debt in pursuit of an education and a good career.

Many young professionals have to delay buying a house, having children or even getting married indefinitely because of the debt they incurred while going to college. Although some student loan programs offer flexible repayment options based on income, the overall amount of debt, which can often be many tens of thousands of dollars, can drain your financial resources and make it very hard for you to move forward in life.

What to know about America's credit card debt

Americans owe a cumulative $900 billion to credit card companies. According to the Consumer Financial Protection Board, there are reasons to be worried that it will be difficult to pay off this balance in a timely manner. Of course, there are also reasons to believe that Tennessee residents and others shouldn't worry too much about paying down their debt. Low unemployment and low interest rates have made it possible for debtors to make their payments in a timely manner.

Furthermore, much of the debt that has been accumulated has been racked up by those with good or excellent credit. This means that they are paying their balances down at a lower interest rate. Furthermore, Americans are confident that the economy is going to remain solid for the foreseeable future. Businesses are forecast to increase their salary budgets by 3.3% on average in 2020.

Filing for bankruptcy can cost thousands

Filing for bankruptcy in Tennessee and other states can cost up to $4,000 after accounting for filing and attorney fees. Those who are filing for Chapter 7 bankruptcy will pay a filing fee of $335 in addition to paying an attorney up to $1,500. Debtors who are seeking Chapter 13 protection will pay a filing fee of $310 in addition to up to $2,500 in attorney costs. Attorneys may charge more if a Chapter 13 proceeding is a complicated one.

The filing fee for a Chapter 7 case may be waived or paid in several installments. Those who switch from a Chapter 13 case to a Chapter 7 proceeding will be required to pay an additional $25 to cover the higher filing fee. There are two courses that individuals will likely need to take before their debts can be discharged. The first is a credit counseling course while the other is a debtor education class.

Things to keep in mind when considering bankruptcy

Bankruptcy has been able to help some Tennessee residents get a fresh start financially, allowing them to save money and avoid taxes on discharged debt. However, it is not always the best move for everyone and certain precautions need to be taken.

One thing that a person needs to look at is their income and assets. If a person has $30,000 in credit card debt or personal debt and they have a car loan, it may not be possible for them to pay off this debt if they make $35,000 a year. However, it would be much more doable if they made $70,000 per year.

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Nashville Office
618 Church Street, Suite 410
Nashville, TN 37219

Phone: 615-686-2279
Fax: 615-255-4516
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Cookeville, TN 38501

Phone: 931-400-2218
Fax: 931-526-6244
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