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Cleveland TN Bankruptcy Law Blog

Know the requirements for a Chapter 7 bankruptcy

The process of filing for bankruptcy is one that's best done with the assistance of an experienced bankruptcy attorney. While it's possible to do it yourself, there's a chance that you'll get something incorrect. This could be devastating to your case.

When you're considering filing for bankruptcy, you have to think about what type you're going to file. One option is a Chapter 7 bankruptcy. Because this option doesn't require you to make payments to the bankruptcy trustee to pay off a portion of your debts, there are strict limits about what income you can have.

What's the difference between debt consolidation and bankruptcy?

It can be quite overwhelming to find yourself with mounting debt. You may find yourself having to choose between two equally unattractive options if you find yourself in this situation. You may have to decide between debt consolidation or filing bankruptcy. There are positives and negatives associated with each. You'll need to carefully weigh your circumstances to make the best choice for you.

Individuals generally take out unsecured personal or home equity loans or transfer balances between credit cards as part of the debt consolidation process. Debtors who pursue this option generally do so because it allows them to both lock in a lower interest rate and make a single payment each month instead of multiple ones.

Bankruptcy may help you to save your home

The fear of losing your home when you're unable to pay the mortgage is a tough one. Most people want to keep up with this payment, but circumstances sometimes don't allow this. It's imperative that you consider your options when you're in this position, especially if you want to save your home and stop the foreclosure.

One of the options that you have is to file bankruptcy, which can help to regain control of your finances. For some individuals, a Chapter 13 bankruptcy provides them with a measure of relief while giving them time to catch up on their mortgage payments.

Chapter 11 bankruptcy may benefit your struggling company

Everyone who starts a business has the intention of growing it so that it's successful. It isn't a pleasant thought to think that all your hard work is going to end with the company not doing as well as you expected it to. You can evaluate your options and come up with a plan when you need to seek financial relief for the business.

One option that you have is to file for bankruptcy for the company. Chapter 11 bankruptcy is reserved for businesses. This reorganization gives you the ability to restructure your debts, but you have to ensure you can meet your obligations if you're going to do this.

Understand specific classifications during a Chapter 7 bankruptcy

A person who files a Chapter 7 bankruptcy is asking the court for debt relief through liquidation. In order to file for this chapter, you have to meet the means test that helps the court to verify that you don't have the ability to pay for these debts through a court-supervised restructuring.

Once you file, your unsecured debts are divided into classes that are assigned priorities. Higher priority debts are paid before lower ones in this process. Secured debts aren't covered in this bankruptcy because they are backed by the collateral, which means the creditor can reclaim the asset to cover the cost of the debt.

Consumer debt can be challenging when income dips or stops

Total consumer debt in the United States was around $14.15 trillion in 2019. Credit card balances that were carried month-to-month totaled around $466.2 billion in Dec. 2019. This is an almost 37% increase over the past five years and just over a 7% increase from the last year.

The average household owes around $7,104 in revolving credit card debt, but this is only a small portion of the total debt owed. The average household in this country owes $137,879. Mortgage debt is the highest category. It is followed by student loans and then auto loans.

Bankruptcy can provide you with a fresh financial start

With the state of the economy and the rising unemployment rate, people are starting to realize that they can't make ends meet. For those who have credit accounts, finding a way to pay these may become a priority; however, it might not be possible because they have to cover the payments for life's necessities.

Depending on how long the situation lasts and how much creditors are willing to work with them, some individuals might have to take drastic measures. If you can't get the creditors to pause your minimum payments or provide you with other forms of relief, you may need to file for bankruptcy. We are here to help you with the process.

These situations can lead to bankruptcy

Many people live paycheck to paycheck and can't save a large sum of money. This can lead to considerable financial difficulties if they are ever laid off or have to take time off work for any reason. For some individuals, there isn't any option to recover on their own. They may turn to bankruptcy as their answer.

There are some situations that lead to bankruptcy more than others. While some think that only people who are irresponsible need to file for bankruptcy protection, there are many cases in which someone will need this financial protection without any fault of their own.

Chapter 13 bankruptcy might provide relief in this economy

The downturn of the economy in recent days is frightening to many people. They just don't know how they're going to make ends meet. The bills don't seem to stop, but the money just isn't there to pay for everything. For people who still have an income that can pay the basic bills, there is a chance that a Chapter 13 bankruptcy might be beneficial.

When you file for this type of bankruptcy, you aren't just writing off your debts. Instead, you'll make regular payments to the bankruptcy trustee. That money is then divided between your creditors so they can recover some of the money they are due. There is a time limit, usually three to five years, for these cases. Once you make the court-ordered payments for the required time, the remainder of the balance due is discharged.

Understand the means test for Chapter 7 bankruptcy

A person who's going to file for bankruptcy has two main options for doing this. One of these is Chapter 13, which requires you to make regular payments to the bankruptcy court. The other is a Chapter 7, which liquidates nonexempt assets to pay off debts. The catch to the Chapter 7 is that you have to pass the means test before you can file.

The means test is a bit confusing when you first read about it. In a nutshell, it is meant to ensure that only people who truly can't pay for their debts through a Chapter 13 are able to secure the protection of the liquidation bankruptcy. Since people who file Chapter 7 don't make payments, the process is much faster than a Chapter 13.

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