During the financial crisis, there were 1.6 million bankruptcy filings per year. While that number has dropped by roughly 50% in recent years, it doesn’t necessarily mean that Tennessee residents are doing better financially. In some cases, individuals don’t file for bankruptcy because they can’t afford the $1,000 or more that it can cost to do so. However, the benefits of filing may outweigh the cost to do so.
Young people who don’t have assets may have a lot to gain by seeking protection from creditors. This is partially because those who file for Chapter 7 bankruptcy are required to take classes that teach them fiscal literacy. Taking these classes can help individuals avoid going into debt again after their current balances are discharged. However, they are not the only ones who could benefit from bankruptcy.
Individuals who are going through a divorce may want to use it as means of managing their finances. Those who file can reaffirm their commitment to paying secured debts while having some or all unsecured debts discharged. This allows people to retain assets while reducing their debt burden, and it can also prevent creditors from garnishing wages. Avoiding a wage garnishment can be ideal for parents who need to make each paycheck last after a divorce.
Filing for Chapter 7 may make it possible to eliminate debts while keeping assets. It may also give a person a chance to learn more about money management and how to budget. While a case is ongoing, creditors are usually barred from contacting debtors. Therefore, an individual may be able to get out of debt without the stress of constant phone calls or collection letters.