Using 30% or less of one’s credit card limit is the hallmark of a good credit score. In Tennessee, more than 28% of adults are using 75% or more of their limit. That makes paying monthly bills extremely challenging. For people smothered by debt, their physical and mental health, personal relationships, and overall well-being pay a heavy price.
If you are overwhelmed by debt, Chapter 7 bankruptcy may provide the solution you need to get a fresh financial start. Taking advantage of this option to help relieve the heavy burden of debt is not shameful. In fact, more than 11,000 Tennessee residents filed for Chapter 7 bankruptcy in 2020. Bankruptcy offers a smart way to get you back on the right financial path and making sound financial decisions for the future.
For more than four decades, I have been helping clients in Kingsport, Church Hill, Johnson City, Bristol, and throughout northeastern Tennessee, navigate their way out of debt using Chapter 7 bankruptcy. I am dedicated to helping my neighbors find a fresh financial start. Reach out to me — Steven C. Frazier, Attorney at Law — to schedule a consultation.
Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” discharges your unsecured debt. The most common type of bankruptcy among individuals, the Chapter 7 process takes an average of four to six months to complete.
Chapter 7 bankruptcy will discharge unsecured debt, including but not limited to credit cards, personal loans, and medical bills. It can also discharge balances due on your auto loans and mortgage, although you will have to surrender your vehicles and real property to do so. You are able to keep your home and vehicle by not discharging those debts.
Chapter 7 will not relieve debt from obligations such as alimony and child support, student loans, back taxes, court fees and penalties, homeowner association fees, and judgments against you for certain personal injury claims. It also will not take care of any unsecured debt you failed to list for discharge in your bankruptcy case.
If your median income is below the Tennessee average, you can file for Chapter 7 bankruptcy. Currently, the average is a monthly income of $4,233.42 and an annual income of $50,801 for a household of one.
If your household income is above the state median, then you are required to pass a “means test” that adds to the calculation of certain allowable expenses based on the county in which you reside. These allowable expenses can be deducted from your income to see if you can then meet the median income requirement.
There are many signs that could indicate it is time to file for bankruptcy:
You’ve spent your savings
You have little or no disposable income
You’re using loans to pay your bills
You make a credit card payment then immediately max out the card again
You’ve fallen behind on mortgage or rent
Creditors are calling about missed payments
Your debts are more than one-half of your annual income
Paying off your debt would take more than five years, even with extreme measures
Financial stress is taking a toll on your health, relationships, and ability to sleep
Filing for Chapter 7 bankruptcy is complicated. You need to be extremely careful about what debt you want to discharge and what you do not. Hiring an experienced bankruptcy attorney is the best investment you can make to right your financial situation.
A knowledgeable attorney is also going to provide you with advice and input throughout the process. For example, just because you qualify to file for Chapter 7 doesn’t mean it is in your best interest, especially if it means you would lose your home. Your attorney can counsel you regarding other options, such as Chapter 13 bankruptcy, which restructures rather than discharges your debt.
If you are overwhelmed with debt, weary of creditor calls, and feel hopeless about getting your head above water, call me — Steven C. Frazier, Attorney at Law — today. I have helped hundreds of clients in Kingsport, Church Hill, Johnson City, Bristol, and throughout northeastern Tennessee, make important decisions and take necessary steps to avoid repeating poor financial decisions.