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Cleveland TN Bankruptcy Law Blog

Can Chapter 13 bankruptcy erase student loan debt?

The student loan debt crisis is all over the news these days and may have hit some people in Tennessee particularly hard. Sometimes a person takes out thousands of dollars of loans in order to get a higher education. Unfortunately, even those who see academic success and receive a degree in their chosen field of study may have a hard time finding adequate employment. Moreover, these loans often have high interest rates.

People who find themselves struggling financially under the burden of student loan debt may consider filing for Chapter 13 bankruptcy.

Can personal bankruptcy protect my home from foreclosure?

Although the economy seems to have rebounded following the Great Recession, there are still many people in Tennessee who are living paycheck to paycheck. A medical emergency, a car repair or a lost job may be all it takes to throw a person into financial catastrophe. Struggling under debts you have no means of repaying is very stressful. And, for many people, one of the biggest hurdles they face is how to pay their mortgage.

Unfortunately, many people in such circumstances are unable to make their monthly mortgage payments and soon find themselves facing foreclosure. The thought of losing your home can be devastating. However, filing for personal bankruptcy may stall a foreclosure, at least for a while, which may make it the right decision for some.

How a Chapter 13 bankruptcy can help with credit card debt

Most people in Eastern Tennessee who are trying to decide whether to file a bankruptcy petition understand the fundamental difference between Chapters 7 and 13. A Chapter 7 filing usually results in the discharge of all of a person's unsecured debt, whereas a Chapter 13 filing usually results in a plan of reorganization that reduces the amount owed on certain debts but does not discharge the basic obligation to repay the debt. Many would-be Chapter 7 filers cannot pass the so-called "means test" that is the gateway to Chapter 7 because they earn too much money. These debtors must turn to Chapter 13 to deal with their credit card debt.

Even though a Chapter 13 petition does not result in the complete discharge of any debts, it can slow the collection process and provide time to negotiate more favorable terms. First, the filing of the Chapter 13 petition will invoke the automatic stay, the order of the bankruptcy court that stops all collection actions in their tracks. This provision will prevent credit card issuers from initiating collection actions or stop existing collection actions.

Understanding the Chapter 7 means test in Tennessee

In our last post, we compared the two principal bankruptcy provisions used in personal bankruptcies, Chapter 7 and Chapter 13 of the federal Bankruptcy Code. Debtors usually prefer filing under Chapter 7 because it can result in the discharge of virtually all of the person's debts, while Chapters 11 and 13 will produce plans in which the bankrupt's debts are merely reorganized for payment over the next three or five years. Anyone who wants to utilize the discharge feature of Chapter 7 should understand the so-called means test.

The means test says that anyone who earns more than Tennessee's median annual income cannot file for bankruptcy under Chapter 7. The income limits prescribed by the means test are $39,759 for a one-member household up to $111,405 for a household of 10 persons. If a person whose income exceeds the annual limit wants to file under Chapter 7, that person must perform a more detailed calculation of annual income.

The important differences between Chapter 7 and Chapter 13

People in Eastern Tennessee who are contemplating filing for bankruptcy know that they must choose between Chapter 7 or Chapter 13 of the Bankruptcy Code, but they may be unsure of the differences in the two procedures. A complete explanation of the differences would not fit in this blog, but knowledge of the important differences between Chapter 7 and Chapter 13 can lead to a reasoned choice.

While both Chapter 7 and Chapter 13 are intended to deal with personal bankruptcy, the most important difference between the two chapters is the end result: a chapter 7 bankruptcy is intended to discharge all of the claims against the debtor, whereas a Chapter 13 bankruptcy is intended to buy time for the debtor to reorganize his or her financial affairs and formulate a reorganization plan that will extend the deadlines for paying creditors. Not every person is eligible to seek relief under Chapter 7; if a person's income exceeds the limit known as the "means test" the person is limited to seeking relief under Chapter 13.

Many Tennessee foreclosures tied to reverse mortgages

We are now more than 10 years removed from the housing market collapse that set off the Great Recession, and the dust is still settling. Though the economy has improved in many ways, many Tennessee residents are still struggling with mortgages and other forms of debt.

A lawyer with experience in debt relief can help people understand their options, including mortgage modification and Chapter 7 bankruptcy.

Study finds student loans a huge factor in personal bankruptcies

For many people struggling with their finances, Chapter 7 bankruptcy is the quickest, most effective way of discharging their debt. It can help with unpaid credit card balances, medical bills and other forms of debt. Unfortunately, it doesn't work for everyone, and it doesn't eliminate every type of debt.

One of the types of debt that is most difficult to discharge through personal bankruptcy is student loan debt, and that's what is so disturbing about a recent report. A study by LendEdu found that student loan debt is a significant factor for a large number of people filing for Chapter 7 bankruptcy protection.

Floral delivery service FTD files for Chapter 11

Sometimes a business can get into a terrible financial mess, with debts it can't control, but all it needs is a little help. Chapter 11 is a way for a business to get its debt under control and reorganize to get into better financial shape.

Recently, the delivery service FTD filed for Chapter 11 bankruptcy protection. Founded in 1910, FTD was among the largest floral delivery services in the nation for generations, and expanded into other delivery services as well. However, the company says it is suffering from the effects of increased competition, especially from delivery giant Amazon.

Survey: 36% of college students held back by credit card debt

Credit cards are convenient ways to purchase goods and services when you don't yet have the cash on hand to pay for them. But credit card companies aren't acting out of the goodness of their hearts when they give consumers this convenient tool. They make money by charging interest.

When consumers can't or don't pay off their balances at the end of the month, their unpaid balance gathers interest rapidly. The average annual percentage rate for credit cards is 17.73%, higher than the highest rates for private loans and more than double the rate for federal student loans.

Fighting wage garnishment

When you're deep in debt, it can feel like an impossible situation. You may have fallen behind on credit card bills, medical bills or other debts, but you're working and trying to save up the money to pay off your unpaid balance. And then, you see that one of your creditors is not going to wait. It has already started taking a chunk out of your take-home pay through wage garnishment.

Like many other states, Tennessee allows creditors to garnish the wages of workers who owe them money. All the creditor has to do is file a complaint against the person in court. The debtor must be notified of the lawsuit, but if they don't show up for a hearing, a judge can generally grant the creditor's request.

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