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Middle Tennessee Bankruptcy Blog

Wage garnishment: What is it, and how can you make it stop?

There are few things as stressful for Tennessee consumers as facing a significant amount of debt they are unable to pay. If you find yourself in this position, you understand the complications that come with being in a difficult financial situation – phone calls from debt collectors, accumulating interest and even the garnishment of your wages.F

For those who might be unfamiliar with the phrase, wage garnishment is a legal tool creditors have at their disposal to force repayment of a debt. Under the laws of the State of Tennessee, creditors may seek payment for what you owe by having your employer remove a certain portion of your paycheck. This continues until you pay the debt in full. If it is already happening to you, or you are being threatened with the creditor action, you may be wondering how to make it stop. The good news? Yes, there are legal actions you can take to prevent it. 

The Chapter 13 hardship discharge

If you are one of the many people in Tennessee who has filed for debt relief via a Chapter 13 bankruptcy, you will know that this is not a quick fix to your debt problems. You are initially obligated to make monthly payments to a trustee for a minimum of 36 months and possibly for as long as 60 months. During such a long span of time, many things in your life may change and you might find yourself in a situation that makes it all but impossible for you to keep up with your bankruptcy payments.

If this happens to you, you should know that you might be able to qualify for what is called a hardship discharge. As explained by the United States Courts, this may offer people who fall on hard times a way out of their Chapter 13 responsibilities earlier than they had planned or promised. One of the criteria for qualifying for this type of discharge is that your creditors should have been paid at least the amount they would have received if you had originally filed for a Chapter 7 bankruptcy.

What is chapter 7 bankruptcy?

Like many Tennessee residents, you may have fallen into personal debt from credit card use, unexpected medical expenses or job loss. When you start to search for ways to get out of debt, you may feel overwhelmed by the numerous options that are available. One such option is chapter 7 bankruptcy. Depending on the unique aspects of your financial situation, chapter 7 may be the right solution to recover from overwhelming debt.

According to the Administrative Office of the U.S. Courts, chapter 7 of the Bankruptcy Code centers on paying creditors through liquidation of assets. One of the potential benefits of filing for chapter 7 is that the petition usually stops ongoing debt collection actions. Before choosing to file for chapter 7, you should understand the qualification requirements. The terms generally state that you must not have filed and then dismissed another bankruptcy petition in the last 180 days. Additionally, you usually must receive credit counseling from an approved source at some point within 180 days before filing.

How Tennessee residents can deal with unexpected medical debt

Have you ever been to the emergency room for something like a broken bone, or have you ever had to stay in the hospital overnight because of a surgery you needed? If so, you are like many in Tennessee who find themselves dealing with expensive and often overwhelming medical bills. Even getting minor medical care can be costly, especially for those needing emergency treatment. 

And who do you know who plans financially for a medical catastrophy? Most people only have enough liquid assets to cover a month or two of bills. In many cases, people need medical treatment before they have had time to financially prepare for such a monumental cost. You may find that you have bills coming in and a debt burden that you can never hope to overcome on your own. If you are facing this seemingly hopeless situation, you are not alone. There are options available to you, including the possibility of securing a better future through bankruptcy.

Retain your assets with Chapter 13 bankruptcy

There are usually only two ways for individuals in Tennessee to file for bankruptcy: Chapter 7 and Chapter 13. Each involves eligibility requirements relating to the amount of debt you owe and the amount of income you bring in each month. Often, you will be eligible for either one or the other, but at Rothschild & Ausbrooks, we have seen situations in which people have qualified for both Chapter 7 and Chapter 13. If this is the case, you have a choice between the two. Each has strengths and weaknesses but, depending on your situation, Chapter 13 offers advantages that may make it more suitable. 

If you worry about losing any of your assets, such as your car and home, upon filing for bankruptcy, Chapter 13 may be the better option for you. While Chapter 7 involves liquidating assets to satisfy your debts, Chapter 13 reorganizes your debt into a repayment plan. There is no chance of losing any of your property if you file Chapter 13. 

Removing missed payments from your credit report

Credit can be a great benefit, offering you easy access to funds in the event of an emergency in Nashville. Yet it also can lead to long-term financial difficulties if you are not able to manage it wisely. It is fine to use credit (even advantageous, in certain situations) as long as you remain committed to paying it back in a timely manner. Missed credit card payments are among the most common issues found on personal credit reports. Such negative marks can remain on a credit report for up to seven years. Many have come to us here at Rothschild & Ausbrooks, PLLC wondering if there is a way to get such issues resolved sooner. 

If you have struggled with credit card debt in the past, you should know that you are not alone. Data compiled in the Consumer Financial Literacy Survey shows that 34 million Americans have admitted to being late with their credit card payments. Even a single late payment can affect your credit score. Yet if you still have an open account with a credit provider, that company may be willing to work with you to remove the record of your late or missed payment in the interest of retaining your business. It might be willing to simply remove the record altogether, or on the condition that you enroll in automatic payments or another of its services. 

Credit card debt a serious concern for many Tennessee consumers

Credit cards have been around for decades. In our modern economy, some businesses have made them a mandatory method of payment, in fact. A recent study showed that the average American family holds 8 cards, using them from for everything from weekly groceries to paying for medical bills. As a result, the overall amount of credit card debt in the United States is at record levels. So if you think you are alone in your credit card debt worries, rest assured, you are not. But you may be one of many people who are no longer able to manage their credit card bills or even make minimum payments.

If you have credit card debt, you may think you have no way out. Due to accumulating interest and growing balances, it can feel impossible to ever get ahead. In your situation, it may be beneficial to consider how filing for consumer bankruptcy can help you finally get ahead and deal with your debt once and for all.

How can an automatic stay stop creditor harassment?

Millions of Americans struggle to keep up with expenses accumulated from medical care, credit card bills, mortgages, car payments, loans and other expenses. If you are one of the many who are buried under a pile of debt, you may know what it feels like to be the victim of harassing phone calls from creditors and collection agencies. These agencies often call debtors all hours of the day and night in an attempt to receive a payment on the account. Surprisingly, some collectors use extreme measures to collect debt. Some have gone as far as threatening to throw people in jail, harm their pets or take their children away from the home. Under the Fair Debt Collection Practices Act, these tactics are prohibited. Yet, an automatic stay can help to ensure collection agencies and creditors are unable to contact you regarding your debt.

Once you file for bankruptcy, an automatic stay is put in place and you can begin to feel relief from creditor calls. The creditors that are listed on your bankruptcy paperwork are contacted and given the automatic stay. As a result, these agencies are no longer able to contact you regarding your debt. An automatic stay also prohibits collection agencies from taking legal action, garnishing your wages or calling your home day and night. The stay may remain in place until your bankruptcy is discharged or until authorized by the trustee presiding over the case.

Is debt settlement better than bankruptcy? Not likely.

When faced with a significant amount of debt, you may feel trapped by your creditors.  Even though debt relief options are available, you may think that they are too good to be true or that they will only further harm your financial situation. Not all debt relief solutions are created equal and some can cause more financial trouble than you already started with. It is important to understand that you can rebuild your credit, especially after using legitimate debt relief options.

Though bankruptcy is often a beneficial debt relief method, many people want to avoid it because they think it will damage their credit beyond repair. As a result, you and many others may want to explore other options that you think could help your situations, like debt settlement. However, it is wise to understand that debt settlement can come with serious risks.

Finding financial security is possible after bankruptcy

After having experienced substantial financial issues and made it through bankruptcy, you undoubtedly want to make sure that you stay on the right financial track. That means using your freed-up cash flow to set yourself up for financial security, which may require taking on some new credit. Of course, the effects of your recent bankruptcy completion may have left you both elated because of the discharge or reorganization of your debt and slightly worried about your future credit.

Fortunately, you do not have to think that your credit's better days are in the past. In fact, you likely have several options for rebuilding your credit and for remaining financially stable as you move on from your completed bankruptcy case.

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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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Nashville Bankruptcy Office