Bankruptcy has been able to help some Tennessee residents get a fresh start financially, allowing them to save money and avoid taxes on discharged debt. However, it is not always the best move for everyone and certain precautions need to be taken.
One thing that a person needs to look at is their income and assets. If a person has $30,000 in credit card debt or personal debt and they have a car loan, it may not be possible for them to pay off this debt if they make $35,000 a year. However, it would be much more doable if they made $70,000 per year.
Some have decided to use debt settlement to ease their financial situation. While this has been beneficial for some, this is one area where caution is needed. If a person is not represented by an attorney, the creditors may try to take advantage of the individual. However, if they have legal representation, the creditor may offer a better settlement to avoid the costs associated with litigation.
If a person is able to settle their account, the forgiven amount may be viewed as taxable income. They could be hit with a tax bill at the end of the year that is quite substantial. In this case, Chapter 7 bankruptcy may be a better option because there will be no taxes on debts that are discharged.
Bankruptcy can offer some individuals a fresh start. However, these benefits can only come to individuals who qualify for them. Some have decided to speak with an attorney in order to find out if they qualify for Chapter 7 bankruptcy. The attorney might be able to offer advice regarding debt relief, asset liquidation, and how to stop creditor harassment. They may also be able to assist with bankruptcy paperwork and even represent their clients in court.