Residents in the Volunteer State continue to struggle financially. For some, bankruptcy is a viable option for a fresh start.

A recent article in the Memphis Business Journal reports that Tennessee tops the nation in bankruptcy filings. Although filings throughout the nation decreased from 72,000 filings in February of 2014 to 65,000 in February of 2015, Tennessee experienced an increase in per capital bankruptcy filings. The state reports 5.17 people filed for relief through bankruptcy for every 1,000 people. This is much higher than the national rate of 2.39 for every 1,000.

Although financial struggles are not enjoyable, those who find themselves in this situation can take comfort in the fact that they are not alone. For those who are unable to make ends meet, various options are available. One option that can offer a fresh financial start is a petition for relief through bankruptcy court.

Chapter 7 bankruptcy

A petition for relief through a chapter 7 bankruptcy proceeding begins with a petitioner filing with the bankruptcy court. Various forms are required, including schedules of assets and liabilities, income and expenditures and statements of financial affairs. The Administrative Office of the United States Courts notes that there is a $245 case filing fee, $75 miscellaneous administrative fee and $15 trustee surcharge. These fees are generally due to the clerk upon filing. In some instances, the court will grant the petitioner an installment payment plan.

If granted, the petition results in an "automatic stay." This court order requires most collection actions to stop. Once initiated, creditors must stop any wage garnishments, lawsuits, telephone calls or other collection attempts against the petitioner.

These benefits are powerful, but those who are considering bankruptcy should carefully weigh the risks as well. Bankruptcy does have a negative impact on credit scores. However, those who receive relief through bankruptcy can take proactive steps to help build their credit after the petition is granted. This can include paying bills on time and using credit wisely (taking out a credit card and paying it in full every month). Thus, although bankruptcy negatively impacts credit in the near future, when done wisely it can have a positive impact on long-term credit.

Importance of legal counsel

These are just a few of the points to take into consideration when deciding if bankruptcy is the best option for you. An experienced bankruptcy attorney can review your unique situation and guide you through the process, helping to put together a more successful case and advocating for your rights.


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