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Embattled USA gymnastics seeks bankruptcy protection

When people run into financial distress in Tennessee, it can be difficult for them to see a way out of their current situation. Fortunately, there are several options including consolidating debt and selling off assets to try and turn things around. In some cases, bankruptcy can be a valuable solution that can provide immediate relief. However, people should be aware that like other forms of debt relief, bankruptcy comes with its own set of challenges. 

In perhaps the most publicized case of bankruptcy in recent news, USA Gymnastics has declared that it is filing for bankruptcy in the wake of the troubling Larry Nassar case. Victims in the case that have readily pursued legal action toward the defendant were disappointed to learn that the filing halted all litigation. While some experts see the outcome as one that will allow victims and their families to receive compensation on a larger scale than previously was available, other professionals warned that the pending bankruptcy would do little to hide the truth. 

Credit card debt and holidays

The holiday season is in full swing and for many residents in Tennessee, that means the holiday shopping season is in full swing. Unfortunately, the desire to show someone how much they mean has become attached to dollar values and that can lead some people to overspend at this time of year. 

According to The Motley Fool, the average consumer in the U.S. started the 2018 calendar year with more than $1,000 in holiday debt. Five percent of people actually amassed about $5,000 in debt during the holidays last year. To make matters worse, half of all people said they would need more than two months to pay off their Christmas shopping debt. The amount of debt seen at the start of 2018 represented a five percent increase over the prior year.

The purpose of pre-bankruptcy credit counseling

A common perception that many in Nashville may have is that personal bankruptcy simply offers one who has been irresponsible in their financial decision-making a way to avoid the consequences of their actions. The fact that most who seek bankruptcy protection file under Chapter 7 may seem to reinforce this fact. Indeed, according to information compiled by the American Bankruptcy Institute, 127,545 of the 200,159 non-business bankruptcy filings from the second quarter of the 2018 fiscal year were Chapter 7 cases. Yet a closer examination of Chapter 7 eligibility requirements reveals that there are several steps one must take before the opportunity to file under this Chapter even becomes an option. 

One of those is to go through credit counseling. The website for the Administrative Office of the U.S. Courts shows that one seeking Chapter 7 bankruptcy protection must first complete credit counseling offered by an approved agency. Some might say that this is just a formality, yet the court does indeed consider the findings of a credit counselor when reviewing one's bankruptcy petition. 

Holiday spending pitfalls you'll want to avoid this year

Moving the calendar along into the holiday season is enough to make your head spin isn't it? Current data shows the average parent spends more than $400 on each person in the household for Christmas alone. That doesn't include wrapping and decorating supplies, holiday meals, travel and other seasonal expenses. 

If it typically takes you a year or more to pay off your holiday debt, you are definitely not alone in the struggle. If, like many other Tennessee residents, you use your credit card for holiday shopping, you may wind up paying $100 or more in interest by the time you pay off the entire debt. This represents just one of many reasons holiday debt often leads to bankruptcy.  

What is an automatic stay?

If you are one of the many Americans who struggle with credit card debt, medical expenses, mortgages and other bills, you may have been contacted by creditors regarding your late payments. Businesses often turn your unpaid, deficient amounts over to a collections agency, who will contact you in an attempt to collect. Collector phone calls may become burdensome, and in some cases, may be considered harassment. Once you file for Chapter 7 bankruptcy, however, you will be saved from harassing creditor phone calls while your bankruptcy is being processed.

An automatic stay is issued to your creditors once your bankruptcy documents are filed with the courts. It is important to include a complete list of creditors in your bankruptcy documents, as they are the agencies who will receive an alert to stop attempting to collect on your debt. After the automatic stay is in place, collection agencies cannot contact you, garnish your wages and initiate or pursue lawsuits. You may fell a sense of relief once your bankruptcy paperwork is filed and you finally stop receiving threatening collector’s calls.

Your mortgage, foreclosure and Chapter 13

On top of worrying about how to deal with creditors and pay monthly bills, people in Tennessee who struggle with serious financial problems may also have to be concerned about having a place to live. Homeowners facing these types of issues may be at risk of losing their homes and may want to find solutions that allow them to keep their treasured houses. Filing for a Chapter 13 bankruptcy may help them do just this.

As explained by the United States Courts, a Chapter 13 bankruptcy is essentially a form of restructured debt repayment in which consumers do not have to give up their assets in order to repay debts. Instead, a person in a Chapter 13 plan makes payments every month to a trustee. These payments are then distributed to creditors according to the court-approved plan. This continues over the life of the bankruptcy which lasts anywhere from 36 months to 60 months.

Your life after completing a Chapter 7 bankruptcy

Chapter 7 bankruptcy is a viable option for individuals who have an insurmountable amount of certain types of consumer debt. This legal process allows an applicant to discharge specific types of debt and emerge to a better and more stable financial future. If you are considering this step, it can be helpful to understand how this process works and what you can expect after it is final.

Many people hesitate to file for Chapter 7 bankruptcy because they are unsure of how it really works. There is a lot of misunderstanding and stigma surrounding bankruptcy, but in reality, it could be a beneficial and positive step for you. It is possible to rebuild your credit and enjoy a future free from harassing phone calls from creditors and debt collectors. 

Using your credit card the right way can build your credit score

While building your credit score takes time and commitment to careful spending, ruining your credit and destroying your chances of getting help from lenders can happen in an instant. One of the most significant risk factors to hurting your credit is accumulating too much debt that you are unable to manage effectively. At Rothschild & Ausbrooks, PLLC, we have helped many people in Tennessee to become more educated about their options for managing debt. 

When you apply for a credit card, you are given restrictions on how much you can spend. Spending your entire allotment is entirely okay if you can pay it back within the designated period that your creditor gives you. Overspending, mismanaging your funds and neglecting to pay back what you have used is a surefire way to destroy your credit score and any remaining opportunities to get credit approval in the future until you are eventually able to rebuild your credit score which will take significant time to recover. 

The difference between secured and unsecured debt

There are many advantages to filing Chapter 13 bankruptcy for those who are able. However, filing for Chapter 13 bankruptcy in Tennessee means meeting certain eligibility requirements in regard to the debt that one owes, as well as the income that one earns. There are limits to the amounts of debt that one can owe and still qualify for Chapter 13 bankruptcy. Specifically, according to the United States Courts, one must owe less than $1,184,200 in secured debt and no more than $394,725 in unsecured debt.

Therefore, in order to gauge one's eligibility for Chapter 13 bankruptcy, one must understand the difference between secured debt and unsecured debt. According to FindLaw, a secured debt is one in which the creditor has the right to take away a specific piece of property if the debt is not repaid. Secured debt includes mortgages and car loans because if the borrower falls behind on payments, the lender has the right to foreclose upon the home or repossess the car. 

Will bankruptcy free me of my student loan debt?

Many Tennessee residents have student loan debt and the inability to repay it. They are not alone. Millions of Americans are in the same position. What can they do about it? Can bankruptcy help?

Typically, student loan debt does not qualify for bankruptcy debt discharge. Typically. That does not mean it is not possible, and that does not mean it will always be that way. With so many people struggling to pay back their students loans, lawmakers are looking into viable debt relief options. In the meantime, what can people who are struggling to pay back their student loans do?

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

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