Many consumers in Tennessee who have accumulated debt they cannot pay back choose to file bankruptcy to stop creditors from calling and get a financial fresh start. Debtors can only file for a Chapter 7 bankruptcy every eight years.
Financial recovery after bankruptcy
Bankruptcy is commonly considered to be a financial disaster that's very hard to recover from. However, new data from financial experts shows that this may not be the case for all debtors in Tennessee. Nearly half of Americans who file for bankruptcy have their credit scores rise dramatically just a few years after filing. In addition, people who went through bankruptcy and raised their scores found that they could get similar mortgage and car loan rates to regular borrowers.
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.
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.
Medical debts and bankruptcy cases
Concerns about medical debt continue to grow in Tennessee and across the United States. According to a study published in 2013, people who have cancer are 2.5 times more likely to declare bankruptcy. The bankruptcy system is designed to give people a fresh start, and it can be a good financial strategy in some cases. However, it also usually requires making sacrifices. The two most common kinds of bankruptcy are Chapter 7 and Chapter 13.
More seniors seeking debt relief in bankruptcy
An increasing number of senior citizens in Tennessee and across the country are facing financial crises up to the point of filing for bankruptcy, statistics show. More seniors than ever before are seeking personal bankruptcy, with that number doubling since 2013. Since 1991, there has been a five-fold increase in the number of seniors in the bankruptcy system. Over 12 percent of filers for bankruptcy are seniors, while only 2.1 percent of people seeking bankruptcy were seniors in 1991.
Loans after bankruptcy mostly determined by credit score and time
Business owners in Tennessee with bankruptcies on their records still could have opportunities to obtain new loans. People who have rebuilt their credit scores might secure financing from some institutions. Lenders also give less weight to bankruptcies that occurred years ago.
Credit scores and the impact of bankruptcy
Tennessee residents whose credit scores have been negatively impacted by their substantial debt may not see a significant impact on their scores if they file for bankruptcy. However, depending on the type of bankruptcy that is filed, it may be 7 to 10 years before they may be approved for new credit accounts such as a home loan.
How to recover quickly form bankruptcy
According to a report from Lending Tree, 43 percent of Americans who filed for bankruptcy had a credit score of 640 or higher a year after their filing. That number increased to 65 percent for those who were two years removed from a bankruptcy. One of the most effective ways to rebound after a bankruptcy is to pay bills on time. It shows lenders that a person has learned from his or her mistakes.
Bankruptcy's real impact on loan pricing
When people in Tennessee are struggling with insurmountable debt, they may consider personal bankruptcy as an option to find relief and escape from a crushing financial situation. However, they may also be concerned about the impact of bankruptcy on their credit and ability to borrow in the future. While 700,000 Americans filed for bankruptcy in 2017, there can be serious impacts, including a reduction in one's credit score.
