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

When bankruptcy is a good choice

Residents of Tennessee might consider bankruptcy to be a last resort solution to debt. However, in some cases, bankruptcy could actually be a smart choice. The stigma associated with bankruptcy often causes people to avoid it by taking other steps to pay off debts. But some of those, experts say, could be more harmful than bankruptcy, like using retirement savings to pay bills.

With overall American household debt topping $13 trillion at the end of 2017, estimates are that 733,000 individuals and businesses will declare bankruptcy this year. Many people will go to great lengths to avoid bankruptcy, basically robbing Peter to pay Paul, and s sometimes 'Peter" is their own plan for retirement.

Experts say that paying bills with retirement savings is a bad idea. For one thing, a younger person could be hit with early withdrawal penalties on their retirement account. In addition, retirement savings can be maintained even if one declares bankruptcy because the law does not allow most retirement accounts to be tapped to pay creditors.

The biggest negative to filing for bankruptcy is the impact it has on a person's credit score. It's a huge hit, and it will stay on the report for up to 10 years. However, one big benefit of bankruptcy is that it legally puts a stop to all collection efforts. One lawyer says that sometimes a major collection effort, like a lawsuit filed by a creditor, is the thing that finally makes someone decide to choose bankruptcy. Bankruptcy can't necessarily stop a creditor's lawsuit that's already been filed, but it can stop future ones from being filed.

For individuals, there are generally two types of bankruptcy. Filing for Chapter 7 liquidates assets to pay creditors and discharges remaining debt. Chapter 13 is available to people who do not qualify for Chapter 7 based on a means test. Chapter 13 involves paying off some debt through an affordable payment plan, after which remaining debt is discharged. Businesses usually have the option of Chapter 11, which is similar to Chapter 13. In some cases, individuals who don't qualify for Chapter 7 or Chapter 13 may be able to qualify for Chapter 11.

No Comments

Leave a comment
Comment Information

We Look At Your Case From Every Angle To Find The Solution That Is Right For You

Bankruptcy help for everyone, from the most simple to the most complex cases.

Call Us Now To Schedule A Free Initial Consultation

Contact our Nashville office at 615-686-2279 or our Cookeville office at 931-400-2218. You can also reach us via email to set up a time to talk to us about your debts.

Get Legal Help Now

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

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

Phone: 615-686-2279
Fax: 615-255-4516
Nashville Law Office Map

Cookeville Office
312 East Broad Street, Suite A
Cookeville, TN 38501

Phone: 931-400-2218
Fax: 931-526-6244
Cookeville Law Office Map

Back To Top