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

Nashville Bankruptcy Law Blog

What to know about Chapter 7 bankruptcy

Individuals and business owners who are looking for a way to handle their debt may wish to file for bankruptcy. Chapter 7 is one of the most common forms of bankruptcy, and it involves liquidating assets and using the funds to pay creditors. Some assets may be exempt from liquidation, which means that a debtor gets to retain those items even after filing. If a business files for Chapter 7 protection, it will no longer remain in operation.

Individuals who file for bankruptcy should understand that some debt will still remain after filing. Student loan debts generally are not discharged unless being required to pay will impose a hardship on an individual. Child support, alimony and certain tax debt will also remain after filing for bankruptcy. A Chapter 7 bankruptcy will remain on a person's credit report for up to 10 years.

Avoiding credit card debt

Many debtors in Tennessee who are struggling to pay their bills cut their credit cards to avoid overspending. While this may seem like a smart way to avoid new debts, credit cards can be an asset for those trying to rebuild credit.

The key to not getting in trouble with credit card debt is to pay it off every month. If credit cards are not used for a long time, card issuers may close the accounts. This can hurt a person's credit score, especially if the account was one of the cardholder's oldest accounts. If a debtor must close credit card accounts, closing accounts that are newer may have the least damaging impact on the debtor's credit score.

Creditor harassment: What bill collectors can and can't do

If you are past due on your bills, you may already know the frustration and exhaustion that can come with collector harassment. Maybe the same person keeps calling you over and over again. Maybe they are rude and disrespectful to you and your family. (Pro tip: You don't have to talk to them.)

The Fair Debt Collection Practices Act (FDCPA) provides protection to consumers by limiting what collection agents can say and do. While that's good news, collectors don't always follow the rules. Here is some essential information about boundaries you can (and should) have with collection agents. 

Credit card debt settlements aren't always ideal

It may be possible for Tennessee consumers to settle credit card debt for less than what they owe. However, it is important to consider the potential consequences of doing so. For example, a debt settlement may only be available to those who can show evidence of a financial hardship. Individuals who are planning on settling their debt should also understand that they can do so on their own without going through a third party.

However, regardless of how the debt is settled, it will likely be reported to the credit agencies. If this occurs, the settlement will appear on a person's credit report for up to seven years, which may result in a lower credit score. Anyone who chooses to work with a debt settlement company should know that doing so won't necessarily put a stop to creditor collection calls. It also doesn't guarantee that a credit card company will reduce a debt balance.

Credit card debt is problematic for many millennials

Student loan debt throughout Tennessee and across America has risen to more than $1.5 trillion. However, for those between the ages of 25 and 34, credit card debt is actually a larger burden. According to the 2018 Planning and Progress Study from Northwestern Mutual, credit card debt makes up roughly 25 percent of the debt burden for those in that age group. Student loan debt makes up about 16 percent of the debt burden for someone aged 25 to 34.

The survey found that many did not find paying down debt to be a top priority. However, this can be a problem as the average interest rate on credit card debt is about 17 percent. That may lead to a scenario where it is impossible to make even the interest payment on the debt. If a debtor misses a credit card payment, that person could face interest rates of up to 30 percent in addition to late fees.

Bankruptcies and debt problems: Common in the music business

Every professional musician knows it's difficult to succeed in the business. Instrumentalists, singers, songwriters, producers and engineers must keep their skills up and compete for good-paying work.

Artists aside, there have been plenty of recent financial struggles within the music industry. It is important to understand that debt problems can and do affect everyone -- from freelance players to huge corporations -- and that various forms of bankruptcy protection can be indispensable to those who qualify for it.

The process of bankruptcy and why people file

With student loan debt on the rise and families struggling with the high cost of medical care, more households may be carrying an unmanageable debt load. Some of them may want to consider filing for bankruptcy.

Most individuals will file for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy is generally for people who are unable to pay back their debts. With a Chapter 13 bankruptcy, debt can be restructured, and the person pays back creditors over a period of three to five years.

Strategies for seniors struggling with burdensome debt

Financial troubles strike people in Tennessee at all stages of life. Seniors represent a growing group of debtors overwhelmed by too many bills and insufficient retirement savings or benefits. Rising health care costs increase the pressure on older people as well. A report from the Employee Benefit Research Institute indicates that households headed by someone 75 or older have an average debt of $36,757 as of 2016 compared to $30,288 in 2010. Some debtors might salvage their positions by analyzing their budgets, adjusting their lifestyles and reaching out to creditors.

In the early stages of financial stress, people might tackle their problems by scrutinizing their budgets. Savings might accrue by cutting out restaurant dates and credit card purchases. Other lifestyle adjustments could include selling a home as long as it has equity and moving to a place with a lower cost of living. For some people, getting a part-time job or renting out a room could increase income and enable the maintenance of debt payments.

Thorough preparation necessary when approaching bankruptcy court

Tennessee residents overwhelmed by their debts could face additional stress if they make incomplete disclosures when filing for bankruptcy. Court paperwork requires that people detail every creditor and amount owed. A failure to inform the court about every debt and source of income might get the case dismissed and force a debtor to start over while creditors resume collection efforts.

Consumer advocates often emphasize that people need to prepare carefully before seeking bankruptcy protection. They might need to go through credit counseling and debt education to become eligible to approach a bankruptcy court.

Bankruptcy and you, celebrities in debt, and other big stories

Nobody is immune to financial problems. That includes superstars of stage and screen, legendary pro athletes and business icons. And it includes you.

In a recent piece from BusinessInsider.com, we are reminded that many celebrities from across different fields, including film, pop music, sports, politics, and literature, have had serious problems with debt, just like millions of Americans do right now. Even stars who have earned 10 figures during their careers may end up in trouble and need help.

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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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