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

Nashville Bankruptcy Law Blog

American credit card debt on the rise

Americans, including Tennessee residents, are racking up a lot of debt according to a new report by WalletHub. In 2017, U.S. consumers accumulated $92.2 billion in credit card debt, which is the most in 10 years. They also added nearly $68 billion in credit card debt in the final quarter of last year, which is the highest quarterly amount in three decades. Overall, the Federal Reserve estimates that Americans currently owe more than $1 trillion in outstanding credit card balances.

Financial experts say that one reason for the explosion in credit card debt could be that charge-off rates are historically low. In response, banks have loosened their lending guidelines and started extending credit to people with below-average credit scores. The practice could explain why the rate of credit card delinquencies jumped from 7 percent in 2016 to 7.5 percent in 2017. This is far below the 15 percent delinquency rate during the height of the Great Recession, but the uptick concerns consumer advocates.

Debt, denial and bankruptcy: Johnny Depp's spending (and yours)

Most of us would like to have more stuff, enjoy a more luxurious life and take nicer vacations, but there's one problem: We don't have enough money to get and do all the things we may want. Living beyond our means, whatever they may be, can lead us into serious financial stress.

Actor Johnny Depp is known to have astonishingly expensive tastes. Despite commanding very high fees -- like a reported $20 million for each of several Pirates of the Caribbean film sequels -- Depp is known for perennially spending more than he earns. Can the same thing be said about you?

Federal Reserve chair questions student debt bankruptcy policy

Tennessee residents who have ever received student loans for college may recall being warned that student loans must be paid even if the borrower ever declares bankruptcy. Though bankruptcy can dismiss other types of debt, student loans are banned from discharge. The chairman of the Federal Reserve does not agree with this policy, according to statements he made at a Senate banking committee on March 4.

The Federal chair, Jerome Powell, brought up the subject in response to a question about whether student debt can hurt the economy. Powell stated that he does not understand the policy that prevents student debt from discharge in bankruptcy. Admitting that he does not have the power to change this policy, he suggested that Congress should look into it.

Chapter 13 bankruptcy and vehicle ownership

Tennessee residents who have substantial debts may use the Chapter 13 bankruptcy process to address them if they have a regular source of income. This type of bankruptcy requires the court to approve a repayment plan that lasts either three or five years. If they own a vehicle before filing for bankruptcy that they want to keep, or if they want to purchase one during or after they process, this may be possible.

Chapter 13 bankruptcy filers may generally retain ownership of the vehicle they own before filing for bankruptcy. However, there are some situations in which they may not be allowed to do so.

Medical debt may be challenging for everyone

For Tennessee residents and others across the country, medical debt is the most common reason to file for bankruptcy. Of those who have insurance and are under age 65, approximately 20 percent say that they have trouble paying medical costs. Although seniors are most likely to have health issues, members of Generation X have the highest levels of medical debt. A person in this generation has a medical debt load of $19,670 on average.

In addition to their health care debt, this generation is also dealing with higher levels of credit card debt. They may also have student loan and mortgage payments to make. Anyone might be able to lower their health care costs by purchasing a policy with the lowest deductibles and other fees. Of course, this may mean paying a slightly higher premium each month compared to the least expensive option available.

Chapter 13 and mortgage arrears: How long before it's serious?

Every homeowner wants to pay their mortgage on time. But things can happen to us that cause financial trouble and make it difficult to stay out of problem debt. Illness, divorce, job losses and business problems are examples of hardships that can lead to missed mortgage payments and fears about foreclosure.

Some individuals and families can use Chapter 13 bankruptcy to avoid the loss of their home and get caught up on missed mortgage payments. Are you one of these people?

Remington announces bankruptcy plans

Tennessee residents have used firearms manufactured by Remington to hunt or protect their property for two centuries, but declining sales have placed the future of the North Carolina-based company in jeopardy. The Remington Outdoor Company announced on Feb. 12 that it would be seeking bankruptcy protection to keep its doors open while it struggles to come to grip with its debts, and many experts say that the victory of a president who staunchly supports firearms is largely to blame.

Hillary Clinton enjoyed comfortable leads in most opinion polls before Americans took to the polls in Nov. 2016, and demand for guns was high among those who feared that the former Secretary of State would introduce strict new gun laws after winning the presidency. However, these fears evaporated, and sales plummeted after Donald Trump entered the White House. Gun dealers around the country have been left sitting on large stockpiles of weapons with few new orders.

Courts may reshape "cram down" modifications

A series of bankruptcy court decisions could signal an impending shift in the way Tennessee courts treat residential mortgages. In a number of cases, Ohio bankruptcy judges greatly expanded a debtor's ability to "cram down" a mortgage on their primary residence. This marks a stark change from how most courts treat these mortgages.

In bankruptcy terminology, a cram down is a process in which a debtor can modify a mortgage on real property whose current market value is less than the amount owed. A cram down bifurcates the mortgage claim, which leaves the amount of debt equal to the value of the home as secured debt but reclassifies the remaining debt as unsecured. This gives a debtor the opportunity to leave the bankruptcy proceeding with a mortgage that is no longer underwater once the unsecured portion of the mortgage is discharged. Bankruptcy courts have long held that cram down modifications are not available on a debtor's primary residence if debtors lived in the residence at the time of filing.

Chapter 11 bankruptcy for individuals

Tennessee consumers who are in debt may be eligible to file for Chapter 11 bankruptcy. Despite popular belief, the Chapter 11 bankruptcy is not intended only for companies.

Individuals who are not able to qualify for Chapter 13 may be able to reorganize their debt under Chapter 11. They may revamp the debts they owe on investment properties, get current with their mortgage payments and pay a substantially reduced amount for the medical and credit card debts they may owe. However, there are distinct differences between Chapter 11 and Chapter 13 bankruptcies.

Collectors who harass consumers: Understand and STOP the calls

One of the worst things about being in debt is having to deal with harassment -- and embarrassment -- from creditors and the bill collectors who work for them. From threatening letters to nasty phone calls, this harassment can be very stressful, especially when you may already be going through a difficult time.

Some consumers wonder what they can do to avoid or stop the intrusive, rude interactions with collection agents that never seem to end.

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

Phone: 615-686-2279
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Cookeville, TN 38501

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