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Cleveland TN Bankruptcy Law Blog

More on using Chapter 13 bankruptcy for business debt

A previous post on this blog mentioned that certain business owners may be able to use Chapter 13 bankruptcy to manage their business debts and therefore save their small business enterprise from having to close.

As this blog has mentioned previously, a Chapter 13 bankruptcy, which involves a southeastern Tennessee resident repaying all or part of their debts over time in a monthly plan supervised by the bankruptcy court, is designed for individuals. Thus, a corporation or other business organization, like an LLC, is generally going to have to file a Chapter 7 or Chapter 11 should it run into financial trouble.

Controlling credit card debt through bankruptcy

A previous post on this blog discussed how easily Bradley County, Tennessee residents can find themselves struggling against mounting credit card debt. As the previous post mentioned, problems with credit debt do not just afflict people who have difficulty with overspending on pleasure items.

In many if not most cases, credit card debt starts with an emergency expense like a car repair or medical bill, or it starts when a family is simply no longer making what they need to make ends meet. While there are many ways to cope with this sort of situation, sometimes a solution may just be too little, too late. At other times, it might be that no solution will work since the underlying cause, like an unsustainable income, has not been addressed.

What is causing credit card debt and how does one control it?

As this blog has reported previously, many people throughout the country, including Bradley County and the communities of southeastern Tennessee, are still drowning in credit card debt.

Contrary to a popular misconception, people don't always rack up credit debt on big ticket items like a blow out family vacation or a large shopping spree. Almost one third of people that were asked in a recent survey claimed that their consumer debt went toward maintaining their standard of living. In other words, they used a credit card as a means kicking the can down the road when they got into an income crunch.

Resolving tax debts through bankruptcy

As this blog has reported previously, a Chapter 7 bankruptcy, which most people think of when they think of filing for bankruptcy, is a good way for a Tennessee family who are struggling with different kinds of debt to get a fresh financial start

Contrary to popular belief, a Bradley County resident actually can discharge some, but not all, types of tax debt in the course of a bankruptcy, even though taxes are considered priority debts that get paid first during a bankruptcy proceeding.

Major toy store chain facing financial problems

The financial troubles of the major retail toy store chain Toys "R" Us have become the subject of speculation in the news media of late, with even some insiders in the company saying that the former king of toy stores is considering a Chapter 11 bankruptcy filing.

According to reports, the retailer, which has not been traded publicly since investors bought the store in 2006 for $6.6 billion, is facing mounting pressure from toy suppliers because of the store's current debt load. The store owes about $5 billion in debts, and $400 million of this amount, almost 10 percent, is due within the next 12 months. Some suppliers apparently doubt the store's ability to keep up and are thus not willing to provide toys unless they get paid in cash first.

How we can help get you a manageable repayment plan

As this blog has previously discussed how Chapter 13 bankruptcy requires a financially struggling family to make regular monthly payments on their debts, some Tennessee residents may be wondering what exactly can be done to make sure the payment plan is manageable for them. After all, the bankruptcy will be of little help if, a few months into it, the family discovers they simply cannot keep up with the payments.

The key in making sure a person's monthly payment is manageable is for a person to make sure that they have accurately stated both their income and their expenses and that they are fully aware of their financial situation, including the possibility of upcoming changes. Overstating one's net income, or income minus expenses, can mean having to pay too much, while understating can make it difficult to get a Chapter 13 bankruptcy approved.

People rarely file bankruptcy just because they spent too much

Even though the stigma surrounding bankruptcy filing seems to have diminished as time goes on, there is still a lingering impression that a Tennessee resident who files for bankruptcy does so because he or she simply spent too much money either through carelessness, or, in the worst case, with no intention of ever paying the money back.

However, of recent years, excessive spending or mismanaging one's ability to obtain credit are just one of many common reasons why people file for bankruptcy protection. Other big reasons people file for bankruptcy are often things beyond their control.

What are some advantages of Chapter 13 bankruptcy?

Many people in Bradley County and throughout the southeastern corner of Tennessee may wonder what advantages there are to filing a Chapter 13 as opposed to a Chapter 7 bankruptcy. After all, the more common Chapter 7 bankruptcy involves a quicker process that can give a family permanent debt relief in sometimes a matter of just weeks or a few months.

Although not an "advantage" strictly speaking, one reason people file Chapter 13 is because they have an income which is too high to qualify them for Chapter 7 bankruptcy. In other cases, a family may prefer to hang on to all of their property and go through with a repayment plan that the Chapter 13 requires, as filing a Chapter 7 could mean the loss of something important to them.

Credit card debt reaches record levels

Credit card debt in the United States is on the rise again, and Americans have even broken their previous record, set in 2008, of $1.02 trillion in revolving debt, which includes credit card debt and other charge accounts. The new record, set in early August, is $1.021 trillion in credit card debt.

The amount of credit card debt has been growing at a clip of about percent a year, largely because credit card companies have loosened their standards somewhat and are allowing more people to have access to credit cards. In the first quarter of this year, for instance, 171 million people had some sort of credit card or at least access to a credit card, whereas the pervious high water mark was 162.5 million people in 2005.

Let us help you make short work of medical debt

A previous post on this blog discussed encouraging statistics showing that the number of bankruptcies has dropped, and some of this drop may be that more residents of Southern Tennessee and Northern Georgia have better health insurance that protects them from sudden and unexpected medical expenses.

The reality though is that many people in Bradley County and the surrounding areas run in to significant medical expenses, often with little or no warning. In some cases, the medical bills themselves pile up, and in other cases, a person chooses to pay off the doctors and hospitals with a credit card, but then the credit card bill piles up.

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