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Bankruptcy filings on the rise in eastern Tennessee

People who are on their way to file a bankruptcy petition at the federal courthouse in Chattanooga often feel as if they are the only ones on this path, that no one else has hit financial rock bottom as hard as they have. The truth, however, is diametrically opposite to such feelings.

Bankruptcy filings here, including Bradley County, have increased since the Great Recession in the first decade of this century. In fact, this area of the country has led the nation for two consecutive years in the per capita rate of bankruptcy filings. The number of bankruptcy filings has increased, while the number of bankruptcy filings nationwide has decreased.

Many observers of this trend wonder why bankruptcy filings are increasing at the same time that wages appear to be increasing. Several theories have been offered.

One theory holds that people are marginally more prosperous, and they are turning to bankruptcy to protect what little excess they have accumulated. Another theory notes that housing and health care costs have risen at a faster rate than income, thereby putting more pressure on existing income levels.

One significant statistic says that people are tending to file Chapter 13 petitions and seeking readjustments of their debts, instead of seeking absolute discharge with a Chapter 7 proceeding. In Tennessee, 59 percent of the bankruptcy filings invoked Chapter 13, whereas nationally, only 37 percent of filers used Chapter 13.

The decision to file a bankruptcy petition can be a difficult emotional choice, but the decision should rest on a person's individual financial situation and not on perceptions about what other people may be doing. An experienced bankruptcy attorney can provide helpful advice on which course to follow.

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