Lefkovitz & Lefkovitz
Nashville Office
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Serving all of Middle Tennessee's Bankruptcy Needs
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Nashville Bankruptcy Law Blog

Which generation struggles the most with debt?

Many Tennessee consumers struggle with multiple types of debt, including credit card bills, student loans, medical bills and unpaid taxes. According to one report that compared how different generations were managing their debt, members of Generation X are struggling more than baby boomers and millennials.

Individuals from ages 21 to 34 were grouped into the millennial category. In 2016, their average credit score rose by about four points, which was higher than gains seen for any other generation. Many millennials graduated college during a time of recession and were forced to take low-paying jobs. Statistics show they are bouncing back from the financial hardships well.

About Chapter 11 bankruptcy

A business owner in Tennessee may use Chapter 11 bankruptcy to reorganize a company if it's saddled with substantial debt. While this type of bankruptcy is usually associated with corporations, small businesses are also eligible to file.

Chapter 11 allows debtors to submit a profitability plan that would be enacted after bankruptcy. The plan may include pursuing new types of revenue or cutting costs. It differs from Chapter 7 bankruptcy, which requires the business to stop operating and sell its liquid assets to pay creditors. Chapter 11 bankruptcy provides a number of benefits to qualified businesses, including the chance to reorganize and additional time to submit a plan; however, it is more expensive than other types of bankruptcy and takes more time to complete.

Ways to cut down on debt

Many Tennessee consumers are overwhelmed by their debts and believe that they will never be able to pay them off. However, some of them who have substantial levels of debt have several options to try to repay them and to improve their credit scores.

If people have poor credit but want to consolidate their debts into one manageable payment, they might be able to get a cosigned or secured loan. If they do this, it is important that they make certain to make their payments on time or else they might risk their collateral or cause financial harm to their cosigners. People who get secured loans in order to consolidate their debts should make certain that they use the proceeds to pay off their debts rather than on something else.

Study says credit report errors are frequent

Some people in Tennessee may not realize that there are errors on their credit reports until they attempt to get a loan or a job. They could be denied the loan or even a job because of errors that are not their fault. One study found that there were more 120 million confirmed credit report errors between 2014 and 2016.

The errors do not have to be major to jeopardize a person's future. For example, one woman in Colorado was getting ready to buy a house. There was a $20 charge on her record from surgery her daughter had as a baby. It took eight months to investigate and correct the charge, and she could have lost the home loan in the meantime.

Bankruptcy and your tax debt: Is it worth trying?

Back taxes can be very problematic. Being in debt with the IRS -- or a state, county or municipal authority, for that matter -- can lead to miserable consequences like payroll garnishment, liens and bank levies, sometimes when you least expect them.

If you have significant tax debt and you're wondering if bankruptcy will help you get out of the mess, the answer will depend on a number of factors. One important factor may be the amount of tax debt relative to your other debts, and another is the age of your tax debt.

How bankruptcy code changes impact creditors

Creditors in Tennessee may need to make themselves aware of changes to existing bankruptcy laws. These changes may impact those who have secured claims, unsecured claims or lien judgments in a Chapter 13 case. One important change relates to filing a proof of claim. Failure to do so may result in not being included in a debtor's Chapter 13 repayment plan. However, liens a creditor may have do not go away merely because a proof of claim is not filed.

It may be possible for a judicial lien to be removed as part of a bankruptcy proceeding as opposed to being a motion separate from the filing itself. Collateral valuations may also be done during the case itself as opposed to being done separately. Proofs of claim must be submitted within 70 days of a bankruptcy filing, and in cases where a home is used as collateral, creditors may have 120 days to file.

Bankruptcy changes

Debtors in Tennessee who are considering filing for bankruptcy may be interested to learn the changes that have been made to the federal rules of bankruptcy procedure. The changes, which became effective on December 1, 2017, also include a new plan form for Chapter 13 bankruptcy.

The president of the American Bankruptcy Institute states that the new form and rule modifications will help to make the Chapter 13 bankruptcy process more uniform across the country and will allow Chapter 13 plans to be confirmed at a faster pace. The ABI president also stated that even though a single Chapter 13 plan form required to be used nationwide instead of any local plan forms is the goal, the changes are an improvement from what was previously in place.

Chapter 13 and foreclosure: Does the bank actually WANT my house?

It's incredibly stressful to live in fear of imminent foreclosure. If you're behind on house payments, your mortgage servicer may have started the hostile letters and aggressive talk about selling your house out from under you. You may be terrified about what this means for your family, and you may thinking about filing a Chapter 13 bankruptcy in order to keep your house.

It is important to fix the problem that caused you to miss house payments in the first place -- perhaps it was an income loss, a divorce or an expensive illness. It is also essential that you have a strategy to deal with the foreclosure threats. But are those threats real, and does the bank actually want your house? It depends.

Can a Chapter 7 help you overcome your student loan problem?

Student loan debt has reached epidemic proportions in the U.S. Millions of young people, along with lots of middle-aged folks and older adults, are struggling with huge student loan payments that are dominating their financial lives and causing them a good deal of stress.

If you've spent any time researching student loans and Chapter 7, you may already know that it's very hard to discharge student loan debt in bankruptcy unless you are, for example, very elderly, terminally ill or permanently disabled; even then it's not a slam dunk.

Chapter 7 versus debt management plans (DMPs): Pros and cons

Nobody wants to stay immersed in the soul-crushing stress of debt, with its harassing phone calls from lowlife collection agents, the shame and embarrassment you feel and the fights it causes in your marriage or family. Whether the debt came from a divorce, a layoff, an illness or another unfortunate event, it doesn't really matter: When you're stuck in it, you just need to GET OUT.

But what's the best way for you to get out of debt and avoid as many negative consequences as possible? How does Chapter 7 bankruptcy stack up against popular non-profit debt management plans? Which one (if either) might be right for you? Let's take a quick look.

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