Some Tennessee residents may be able to file for bankruptcy to get a better handle on their finances. Both individuals and businesses can file for protection from creditors, and there are many different types of bankruptcy to choose from. Chapter 7 bankruptcy is known as a liquidation bankruptcy. It involves selling some or all of a debtor's nonexempt property in an effort to raise money to pay off creditors.
What to know about debt collection efforts
Debtors in Tennessee and throughout the country may be contacted by a debt collection agency. While there are many tactics that they can use to collect payment, there are also things they cannot do in an effort to obtain a debt. It is important for an individual to understand his or her rights under the Fair Debt Collection Practices Act, or FDCPA. It prohibits debt collectors from using abusive language or from contacting debtors at work.
Tennessee debtors might want to consider Chapter 13 bankruptcy
Chapter 13 bankruptcy is sometimes referred to as reorganization bankruptcy. It allows a person to pay off debts over a predetermined period of time, typically three to five years. It is ideal for a wage earner with good income who is having trouble making payments on time. One of the advantages of a Chapter 13 bankruptcy is that it allows a debtor to keep certain assets, such as their home and car.
Americans under 30 owe $1 trillion to creditors
Those between the ages of 18 and 29 owe $1.05 trillion to creditors. Tennessee residents and others in this age group have student loan, credit card and auto loan balances in addition to other types of debt. However, they owe less overall than other age groups. Those who are between the ages of 30 to 39 have a collective debt balance of $2.9 trillion.
Vehicle repossession and filing for bankruptcy
Some people in Tennessee who are facing repossession of their vehicles might consider filing for Chapter 13 bankruptcy. This would potentially allow them to restructure a payment plan and keep the vehicle. However, there may be other alternatives that the person can try before bankruptcy.
Reasons to consider bankruptcy as opposed to foreclosure
If a Tennessee resident is struggling to keep up with a mortgage payment, it may be possible to ask for a loan modification. However, there is no guarantee that a lender will allow this to happen. If a lender does not want to modify the terms of a home loan, a homeowner could choose to file for bankruptcy. This may postpone the foreclosure process, which generally begins two or three months after a missed mortgage payment.
6th Circuit rules that FDCPA prohibits third-party collections
Once a consumer disputes a debt according to the requirements of the Fair Debt Collection Practices Act, debt collectors and third-parties must cease collection activities. The Court of Appeals for the 6th Circuit, of which Tennessee is a part, ruled that third-party collections that were set in motion by the debt collector must cease when the consumer disputes the debt. The case involved pre-foreclosure activities by third parties, but it is likely that lawyers for debtors will argue it applies to all third-party collections activities.
Fewer people are filing for bankruptcy compared to a decade ago
In September 2018, there were more than 770,000 bankruptcy filings in the United States. Of those cases filed in Tennessee and elsewhere, 97 percent were consumer bankruptcy filings. The number of cases filed was down from the roughly 1.6 million filed in September 2010. However, the downtrend in bankruptcy filings may be related to the cost of filing. It may also be related to the fact that many people don't have assets to protect.
How to tell if credit card balances are excessive
There are many signs that a Tennessee resident may have too much credit card debt. For instance, if they are using credit cards to pay off other credit cards, that is likely a problem. Other signs include if card balances are maxed out or if payments are higher than the debtor's other bills. Those who have a high debt-to-income ratio should also check to see if their credit card debt is causing the problem.
Bankruptcies more prevalent among older Americans
In 2017, there were 789,000 bankruptcy filings, which were the second-lowest since 1990. That compares to the 1.6 million filings in 2010 in the aftermath of the Great Recession. However, the decline in bankruptcy filings hasn't been uniform for all age groups. Older Americans in Tennessee and throughout the country are filing for bankruptcy at a higher rate than in previous years. There are several reasons as to why this may be the case.
