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Middle Tennessee Bankruptcy Blog

Dispelling the bankruptcy myths that can cause anxiety

You are probably receiving a lot of unsolicited advice from your well-meaning family, friends and associates if you discussed with them that you are thinking about filing for bankruptcy. At the law office of Rothschild & Ausbrooks, PLLC, we know that it is stressful and even frightening when you have reached the point where a personal bankruptcy is a possibility. However, you and other Tennessee residents should understand that much of the advice you have been given is outdated or simply untrue.

For example, take the common myth that your financial future will be ruined for life if you go through a bankruptcy. As NerdWallet explains, a bankruptcy can negatively impact your credit for several years, but you can begin rebuilding your credit as soon as your discharge is complete. You may even qualify for loans and a new mortgage sooner than you think after your bankruptcy.

Are you among the many who are struggling with medical debt?

Medical care is expensive, and it only takes one emergency, accident or unexpected illness to end up in serious debt. Tennessee readers who are dealing with medical bills that they cannot pay may feel alone, but they shouldn't. Many people across the country are facing past-due medical bills, and as a result, they are struggling with additional financial complications.

Even with insurance coverage, people who need certain types of care will almost certainly have to pay some out of pocket. It's expensive, and it can quickly lead to a person having to drain his or her savings just to stay ahead. Fortunately, there are different options by which a person can deal with this type of debt and secure a better financial future.

Involuntary bankruptcy transitions ownership of care facilities

When businesses in Nashville file for bankruptcy, most might assume that is it under Chapter 11. This is the form of bankruptcy that allows companies to create a restructuring plan that will hopefully allow them to avoid debt struggles in the future. Yet there may be times when a restructuring is not possible, and the only solution available to a company is to liquidate its assets, repay its creditors and move on. This may be the conclusion reached by a company's management team, or in some cases, the decision might be made for them. 

The latter is exactly what happened in a recent bankruptcy case in Minnesota. The operator of several skilled nursing facilities across four states was forced into an involuntary Chapter 7 bankruptcy by three of its creditors. The company reportedly has over $17.5 million in debt that is owed to several different vendors. At risk in this case was the well-being of over 1,300 residents currently living at the company's facilities. The company apparently already realized this, as it quickly sought a settlement in the case. Both sides recognized that it no longer had the resources to care for its many patients. However, ownership and management of its facilities has already been transferred to a new organization, avoiding any interruptions that might have occurred in the delivery of care to patients. 

Second mortgages and bankruptcy

It is not uncommon for homeowners in Tennessee to have both first mortgages and second mortgages on their homes. The presence of a second mortgage can at times leave consumers wondering about their options when they find themselves faced with serious debt problems. When contemplating filing for bankruptcy, some people may want to try and save their homes yet also want to get out from under a mound of unmanageable debt.

As explained by the San Francisco Gate, a home might be able to be saved in a Chapter 7 bankruptcy but in many situations, it is a Chapter 13 bankruptcy that ends up being the better option for homeowners who want to keep their houses. Depending on how a second mortgage is classified, it may even be able to be released during a Chapter 13 bankruptcy. The biggest factor in determining whether or not a second mortgage can be released is if it is considered secured or unsecured credit.

Why Chapter 13 bankruptcy might be your best option

If you're one of many Tennessee residents currently trying to overcome non-business related financial struggles, you'll be interested to know that lots of people have successfully recovered from similar situations by filing for Chapter 13 bankruptcy. If you cringe at the mere mention of the word "bankruptcy," you'll be glad to learn that although there is somewhat of a negative stigma attached to the idea, it can be a valuable financial tool when your ultimate goal is to restore financial stability without having to liquidate your assets.

Chapter 13 is often an optimum choice for immediate debt relief rather than filing for Chapter 7 bankruptcy, especially if you have a reliable source of income and you earn the same or more than the state median. It's always a good idea to explore all financial relief options available, as choosing one that fits your needs can be the first step toward overcoming your present crisis and building a stronger financial future.

Are you making some of these debt mistakes?

Numerous Tennessee residents are struggling financially. Are you one of them? If you are, it is okay. There may be a way to improve your situation. It all starts with not making some common debt mistakes.

A recently released article discussed five debt mistakes that people make that only hurt their debt repayment efforts. What are they and why should these mistakes be avoided?

How to use a secured credit card to rebuild credit

People in Tennessee who have struggled with high levels of credit card debt might end up having their cards cancelled, especially if they file for bankruptcy relief. The ability to become free from the debt associated with credit cards can be immensely helpful but then it is time to turn one's attention to rebuilding credit in a positive and manageable way. A secured credit card may well offer a good first step in doing just this.

As explained by USA Today, a secured credit card differs from typical credit cards in that it requires the consumer to essentially front money that acts as collateral against the credit limit assigned. For example, to get a secured credit card with a $300 credit limit, a person would pay $300 in advance to the bank. This money is then held and may be refunded if the card is later cancelled.

It's a new year. Do you need a new financial plan?

January is often a financially stressful month for many Tennessee consumers. You may relate, if you have come away from the holiday season with a whopping amount of credit card debt due to expenses associated with gift purchases or other issues. Perhaps you wound up having to swipe your credit card at the gas pump more than usual while traveling to visit relatives during the holidays.

Maybe you're among those who were in a car accident, suffered a job loss or faced other unforeseen, extenuating circumstances, such as a medical emergency that threw your finances out of whack. Even with the best intentions, it can be difficult to get things back on track when the debt balance increases and your means for paying it back doesn't. The good news is that most financial problems are temporary; a key to resolving such issues lies in how well you understand your options to secure debt relief.

Options for eliminating credit card debt

In the world of debt, there are two primary forms that Tennessee residents should understand. The first is secured debt which is any type of debt associated with a real item that acts as collateral. Examples of secured debt include mortgages and auto loans that are connected to homes and vehicles. The other type of debt is unsecured, meaning there is no collateral associated with it. Credit card debt is perhaps the most common type of unsecured debt that plagues Americans.

When it comes to finding ways to reduce credit card debt, Forbes indicates there are different strategies that consumers might want to consider. One of these is to focus on eliminate the debt with the smallest balance first. This may provide fast results and help people feel successful in managing debt, fueling their efforts to continue chipping away at the next debt balance. Another option is to first target the debt that has the highest interest rate associated with it and pay this off, moving on to other debts after that.

Chapter 7 or Chapter 13: Which makes sense for your situation?

Are you one of the many Tennessee residents struggling to keep your head above water financially speaking? If you are, debt relief options may be available to you. There are a few options out there, and trying to figure out which makes sense for your situation can be difficult.

Bankruptcy is not for everyone, but for some people, it is the best thing they can do to improve their economic situations. There are two types of consumer bankruptcy: Chapter 7 and Chapter 13. How are they different?

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

Toll Free: 866-656-8909
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