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Middle Tennessee Bankruptcy Blog

Why are more boomers filing bankruptcy?

If you are one of the many baby boomers in Tennessee, you might be retired already or perhaps you are eyeing the possibility of retirement soon. At the same time, however, you may be experiencing a financial situation that is far from what you once had planned for yourself at this time in your life. 

Money and Markets reported on the findings from a study conducted by the Consumer Bankruptcy Project that sheds light on the growing debt problem for people who are 65 and older. People in the age bracket of 65 and up have seen their median level of debt double between 2001 and 2013. Additionally, this group now represents more than 12 percent of all bankruptcy filers compared to two percent in 1991.

Party officials bring up opposing candidates bankruptcy

One of the reasons that many in Nashville may be hesitant to consider bankruptcy as a legitimate option to help combat their struggles with debt is the perceived stigma that is associated with it. Some might view those who seek bankruptcy protection as being irresponsible with their money and simply looking for a way to not have to face the actions of their poor financial decisions. Yet this line of thinking might actually reinforce the notion that the decision to file for bankruptcy is a brave one, in that doing so places one in a position to be scrutinized. 

The level on scrutiny one may face might even be more pronounced given their status within their local communities. This fact is on full display in the story of a Michigan woman whose bankruptcy case is now seemingly being used against her by political opponents. Her candidacy for county clerk was attacked when representatives of the opposing party in the county released information showing she had filed for Chapter 7 bankruptcy in 2013. Included in her list of liabilities were a mortgage and car payments, as well as credit card and student loan debt. The woman has since responded by labeling the move as political mud-slinging. 

Should I be ashamed to file for bankruptcy?

As you are attempting to deal with financial hardships outside your control, well-meaning friends, family and associates might be confusing you with their two cents. Bankruptcy should only be used as a last resort, they might say. Or, if you file for bankruptcy, your credit will be ruined for life. You’re taking the easy way out, is another common accusation stated against those who are considering a personal bankruptcy. To preserve your emotional well-being and lift the weight from your shoulders, you and other Tennessee residents should understand the truth about the so-called stigma of filing for bankruptcy.

Bankruptcy is filed more commonly today than in past decades, but a stigma remains, explains Fox Business. Like others who are considering bankruptcy, you might worry that having a bankruptcy on your record could hurt your job prospects or affect your ability to rent or get a loan in the future. You might also feel guilty for not repaying your debts. It can be reassuring to learn that although a bankruptcy will negatively affect your credit score for several years, you can begin to rebuild your credit soon after your debt discharge, and you might even be eligible for some loans sooner than you would expect. You should also not feel guilty or ashamed for being unable to make your credit card payments and pay off your other debts. Bankruptcy is a legal option that enables countless people to recover from unexpected financial difficulties and prevent their situations from getting worse.

Bankruptcy: Shows on credit report but does it ruin your score?

Whether you have lived in Tennessee all your life or are a recently arrived resident, you may find its economy much like that in other states: sometimes great, sometimes not. In fact, the ebb and flow of the global and national economies ultimately have impacts on your local and personal economic situation as well. In short, if you've been dealing with some financial problems lately, you're likely not alone in your struggle. 

Bankruptcy is a potentially viable option for obtaining real debt relief, but it often gets a bad rap. The trouble is that most of the negative stigma regarding bankruptcy is associated with myths, not facts. Has someone told you that filing for bankruptcy would be a bad idea because it will ruin your credit score? If so, you'll want to keep reading this post because that statement is not necessarily true.

Enter retirement with financial peace of mind through bankruptcy

As you prepare to enter retirement, your plans may not include dealing with the realities of debt. Most people enter retirement with some debt they have been handling for years, only to discover that the reduced or "fixed" income of a pension, 401k or Social Security makes paying those monthly bills far more difficult than they anticipated. Adding new debt due to an unexpected medical bill can become a substantial threat to your financial stability.

While entering retirement with outstanding debts can be stressful, it is also all too common, and similar concerns could leave you in search of some much-needed relief. In this, you are not alone, as bankruptcy filings among individuals over the age of 65 have tripled over the past 30 years alone.

What is the homestead exemption?

If you file Chapter 7 bankruptcy in Tennessee, your assets may be seized and sold to repay a portion of your debts. To ensure that you are not left without anything or any means to rebuild, the state affords you some exemptions. In Tennessee, the homestead exemption provides you protection for your home.

According to the Tennessee State Government, the current exemption for your home when you file bankruptcy is $7,500 if you are a joint owner or $5,000 if you are an individual. What this means in simple terms is that if your home is worth more than $5,000 or $7,500, it can be sold to repay your debts in a bankruptcy.

The credit counseling repayment plan requirement

Having made the decision to file for Chapter 13 bankruptcy in Nashville, you are likely to remain fairly resolute with it. After all, such a decision should not be taken lightly. While bankruptcy does offer you the advantage of halting any creditor actions from being taken against you (while also allowing you to retain some of your more important personal assets, like your home), it is not without its share of challenges and difficulties. For this reason, many of those who come to see us here at Rothschild & Ausbrooks, PLLC are often discouraged when they are told that before filing for bankruptcy, they must complete credit counseling. 

Your first impression upon hearing this may be to assume that it is simply a recommendation that we make. Yet according to Section 521(b) of the U.S. Bankruptcy Code, it is indeed a requirement that all those seeking personal bankruptcy must complete. Part of this mandatory credit counseling involved creating a repayment plan to pay back your debts without bankruptcy. You may question the need for this knowing that your financial situation is not one that can be easily resolved on your own (hence the decision to seek bankruptcy protection). Yet the purpose of the proposed repayment plan is not to deter you from continuing in your bankruptcy case. 

What is the Card Act?

If you are a longtime credit-card user in Nashville, you should have noticed a few changes in your billings as a result of the Credit Card Accountability and Disclosure Act, or Card Act, passed in 2009. No longer are you socked with substantial fees and interest-rate hikes for indiscretions such as making a late payment, going over the credit limit or carrying a balance on your card. In fact, there are several benefits to consumers from this law, many of which you may not be aware.

NerdWallet reports that the act installs restraints on the practice of “universal default,” a method of credit-card issuers to hike interest rates on all your credit-card balances when you made a late payment on one account. The Card Act bars companies from boosting the interest rate on new balances for a full year after the account is opened and bans rate increases on existing balances too. As part of the restrictions, issuers must notify cardholders at least 45 days in advance of any bumps in the interest rate. Other protections found in the act include:

  • Double-cycle billing: Issuers are banned from using the balances of two billing cycles to calculate monthly interest charges, which generally boosted interest charges.
  • Late fee charges: Since January 2017, fees are limited to $27 for the first payment that is late and $38 for ongoing late payments within a six-month period.
  • Over-limit fees: Consumers must choose to allow the issuer to approve transactions over their limit, which essentially takes away their reason for charging over-limit fees.
  • “Fee-harvesting” cards: People with bad credit could typically only get high-cost credit cards with low borrowing limits. The act mandates that issuers limit fees such as annual enrollment and maintenance charges to no more than one-fourth of the card’s initial credit limit in the first year.
  • Billing practices: Issuers must mail statements 21 days before the due date, which must be on the same day of each month.

Can bankruptcy eliminate student loan debt?

There is a lot of debate about what to do to help the many Americans who are drowning in student loan debt. Reports often state that this debt cannot be a discharge in bankruptcy, so people carry it, hurting their credit and growing their debt further as they go throughout their lives. Guess what, Tennessee residents may actually be able to have their student debt discharged through bankruptcy, but it can be difficult to accomplish.

How can student loans be a discharge through bankruptcy? Everyone else says it is impossible. The truth is, there are never any guarantees that it will work, but that doesn't mean it is not worth trying.

Study finds high rate of medical debt in South

While credit-card debt may once have been on top, medical debt has replaced it as the main reason that residents of Tennessee and all other states declare bankruptcy. That may or may not be news to you; it has been leading the list of bankruptcy causes for a few years now.

The Huffington Post explains that, of those individuals who filed for bankruptcy in 2015, 62 percent cited medical debt as the reason. What is surprising is that the majority of those in this group—72 percent—had health insurance of some type. The majority of people in this group have health insurance of some kind.

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Rothschild & Ausbrooks, PLLC
1222 16th Avenue South, Suite 12
Nashville, TN 37212

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