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Cleveland TN Bankruptcy Law Blog

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.

Bankruptcy may help you save your home

Residents of Eastern Tennessee who are experiencing financial troubles probably worry most about losing their homes. One of the most common questions regarding bankruptcy is whether the bank holding the mortgage on a home can commence foreclosure proceedings and reclaim the house. The answer to this questions is not a plain "yes" or "no." The answer depends upon many factors, including the type of bankruptcy petition that the homeowner files.

The bankruptcy code offers instant protection from foreclosure by requiring all creditors, including all mortgagees, to immediately halt collection on all debts owed. This procedure is called an automatic stay. Upon the filing of the bankruptcy petition, the court issues an order to all creditors directing them to stay collection proceedings. If a bank or other mortgagee has begun foreclosure proceedings, those proceedings must stop until the bankruptcy is completed.

The advantages of reaffirming a debt in a Chapter 7 bankruptcy

Most people in Eastern Tennessee think of bankruptcy as a method of discharging their obligation to pay back certain debts. Many people resist the idea of filing a bankruptcy petition because they are afraid that they will lose valuable possessions, most significantly, the family home. While understandable, this fear overlooks an important feature of the bankruptcy code: debt reaffirmation.

In a Chapter 7 bankruptcy proceeding, the debtor must allow the trustee to take possession of all property that is not covered by a bankruptcy exemption. The property is then sold, and the proceeds are paid to creditors. Whatever balances that remain due on these debts are then discharged by an order of the court. An important exception to this procedure is the reaffirmation of a debt that is secured by a lien on the debtor's property. The most common examples are the family home and automobiles. The debtor can retain possession of such assets by entering into a reaffirmation agreement with the lender.

How does the CARD Act protect Tennessee consumers?

Most people in Eastern Tennessee have probably never heard of the CARD Act, even though it contains some of the broadest consumer protection provisions in the United States Code. Even a summary understanding of the Act's provisions can help Tennessee consumers avoid burdensome credit card debt. The Credit Card Accountability, Responsibility and Disclosure Act was passed by Congress in 2009 in response to the Great Recession. The law clarifies certain portions of the Truth in Lending Act and adds a number of important protective measures.

The first section of the Act places limits on the rights of card issuers to change or manipulate interest rates on their cards. A card issuer must give customers 45 days advance notice of any change in interest rates that was not spelled out in the initial agreement. Any rate increase notice must also give the card holder the right to cancel their account. The Act also places additional limits on changes in payment dates and over-limit fees and prohibits charging special fees based on the method used to make payments on the card balance.

We help folks facing problems with credit card debt

Credit card debt can be easy to accumulate and very difficult to pay back. Unanticipated emergencies, unemployment and other unforeseen expenses can cause credit card debt to add up quickly. Events like holidays and other special occasions can add to the debt. Not too long ago, we discussed the impact of the holiday season on the average American's debt burden.

According to a survey, Americans accumulated on average more than $1,000 in new debt over the course of a recent holiday season. About 20% of Americans accumulated $2,000 or more during the holidays. Over two-thirds of those surveyed used a credit card or an in-store card to finance their debt. Over 60% of people in debt had not expected to take on debt at the start of the holiday season. Fewer than 50% of those surveyed thought they would have their debts paid within three months.

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