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Considering bankruptcy? Get the facts straight

On Behalf of | Jun 22, 2020 | Uncategorized

Do you owe numerous creditors in Tennessee or elsewhere a lot of money? If so, you’re definitely not alone in your current financial struggle. Many people throughout the country are facing similar economic troubles. Just as life is an ever-changing experience, you can say the same about finances. There’s typically a continual ebb and flow, a fluctuation, where you may be standing on solid financial ground one minute and watching the train derail the next.

Careful budgeting can often help keep financial disaster at bay. Then again, you may experience an unexpected event that topples even the best-laid plans. Bankruptcy is a valuable financial tool that can bring about immediate debt relief and help lay the groundwork for a stronger financial future. There is a stigma attached to bankruptcy, however, as well as several myths that tend to circulate about it. This is why it’s important to learn the facts before you determine a best course of action in your situation.

You will not automatically lose your possessions

If you hesitate to file for bankruptcy because someone has told you that you’ll lose everything you own, it’s not necessarily true. In fact, most Chapter 7 bankruptcies are no-asset cases, meaning you might be able to retain possession of major assets, such as your home or automobile. You’ll want to review Tennessee laws to see what types of assets may be exempt because it varies by state.

When you file for Chapter 13 bankruptcy, you can look at it as a restructured payment plan. You maintain possession of everything you own. Under this type of bankruptcy, the value of your assets is factored into your repayment plan.

You cannot discharge every kind of debt

It’s critical that you understand how various bankruptcy programs work in order to determine which might be a most viable option given your current circumstances. There are certain types of debt that may remain on your record, debts you would still have to pay because you cannot discharge them through bankruptcy.

For instance, if you owe child support, this is not a dischargeable debt. You must adhere to the terms of your court order, no matter what, unless you petition the court for modification and the judge grants it. Otherwise, you must keep making timely child support payments even if you qualify for bankruptcy. You also can’t discharge any tax debt that you owe.

Bankruptcy doesn’t equal financial failure

Maybe you don’t want to file for bankruptcy because you’re afraid your family members or friends will think you’ve failed financially. While filing for this type of debt relief is a serious decision, it doesn’t mean you have failed. It’s better to look at it as a financial remedy that can help you get things back on track and regain control of your finances.

You can rebuild your credit

Just as filing for bankruptcy doesn’t mean you have failed in life, it is also not true that having a bankruptcy on your financial record will permanently ruin your credit score. Chapter 7 or Chapter 13 bankruptcy will only remain on your credit report for a certain number of years.

You can also obtain a secure credit card or take other steps to restore your credit rating after you have filed for bankruptcy. The best thing to do to find a solution in financial crisis is to speak with someone who is well-versed in Tennessee bankruptcy laws who can review your case and make recommendations as to which options best fit your specific needs and ultimate financial goals.


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