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Knoxville Bankruptcy Law Blog

The proper reaction to different degrees of credit card debt

Tennessee residents encounter escalating debt for a number of different reasons, many of which lie beyond their control. When credit card debt mounts, the manner in which a consumer responds will shape the outcome. Knowing how to respond to ongoing credit card debt struggles is important, and can prevent a negative financial outcome.

When an individual is in the early stages of debt, it may simply be a matter of a pattern of late payments. The best reaction in this scenario is to take a proactive approach. Reach out to credit card companies and let them know that there will be a delay in payment for that month. Very often, the creditor can assist by waiving fees and fines, which can make it easier to manage the rest of that month's budget.

What to do if debt collectors call a place of work

Student loan debt has gotten out of control. Over $1 trillion in student loan debt exists throughout the United States. Out of that number, approximately $22 billion belongs to people in the state of Tennessee, according to an article found in the Memphis Business Journal

That is only counting student loan debt. There are many other ways for people to become consumed by debt, and as a result, many people fear calls from debt collectors. One tactic they sometimes use is calling a person's place of work to reach someone who owes an agency money. Many people wonder if this is legal and what is possible to prevent it. 

Can Chapter 7 bankruptcy save an inheritance?

Many Tennessee residents will encounter some form of severe financial difficulty at one time or another. The timing of that misfortune can make a world of difference in one's financial future. In fact, without careful planning, it is possible for an individual to lose the entirety of his or her inheritance. A well-timed Chapter 7 bankruptcy can prevent that outcome, and is an option that individuals may want to consider.

If an individual is in serious financial straits at the time that he or she receives an inheritance, creditors have the right to pursue inherited wealth to satisfy outstanding financial obligations. That can mean the depletion of some or all of an individual's inheritance. That outcome is probably not what was intended when the estate planning process was underway.

Weighing Chapter 7 bankruptcy against debt settlement

For those in Tennessee who are burdened with heavy loads of debt, there are several available options to find relief. One involves filing for Chapter 7 bankruptcy, a process that is never one's first choice. Another option is pursuing debt settlement, which is a path that may seem very appealing to many consumers. It is important to understand the differences between bankruptcy and debt settlement prior to making a choice.

Debt settlement works by negotiating directly with creditors to reduce the total amount owed on a given debt. The consumer agrees to pay the reduced amount, and the creditor agrees to forgive the remainder of the debt. That debt goes away on paper, but there are tax ramifications that are often not considered during the decision-making process.

Ranking student loans in a debt management approach

Faced with a heavy burden of debt, many Tennessee residents understand that they need to sit down and chart out a course of action. For many, devising a debt management plan is a challenge. The entire process may seem overwhelming, and it can be difficult to know where to begin. A powerful starting point for those who have student loan debt in addition to other financial obligations is to determine how to prioritize student loans in relation to other types of debt.

There are cases where paying down student loans should be done prior to addressing other debts. An example is in cases where student loans have high interest rates. Another indication that a student learn should be paid off first is if that loan has a relatively small balance compared to other debts. For individuals who are seriously considering bankruptcy, it may make more sense to pay down student loan debt, as other types of unsecured debts could be eliminated through the bankruptcy process.

Tips on dealing with credit card debt collectors

Struggling to overcome high levels of debt can feel overwhelming for Tennessee residents. That is especially true when debt collectors begin calling. While there are regulations in place to limit the tactics that debt collectors may use, many companies operate outside of those established boundaries. Understanding how to handle interactions with credit card debt collectors can make it far easier to work through times of financial turmoil.

One thing to remember is that debt collectors have no right to collect personal information on individuals they contact. Regardless of whether or not they request such information, it is not necessary to provide one's date of birth, Social Security number or other private information. Debt collectors are already supplied with a great deal of information on the accounts they are attempting to collect, and require no additional input from individuals listed on those accounts.

Debt management can negatively impact personal relationships

Being in a relationship can be an exhilarating experience, when the world seems full of possibility. For many people, the relationship reaches a point where the focus tends to turn toward long-term compatibility. Financial management is a critical area of concern, as differing approaches can lead to conflict and strife in a relationship. This is an area where debt management can either make or break a relationship for Tennessee residents.

One study took a look at how people approach student debt and relationships. Among 1,000 respondents, 75 percent stated that student loan debt represents "baggage" in a relationship. In fact, high levels of debt were viewed as more of a concern than a past divorce, a child or a nonviolent felony conviction.

Four tips for managing your first credit card

Getting a credit card for the first time is exciting. However, you want to avoid becoming inundated in credit card debt. A report in USA Today states that overall, Americans hold an average of $3,600 in credit card debt. You want to fall well below that average. 

To avoid debt throughout your lifetime, you should begin with a firm foundation. That means using your very first credit card wisely. If you are considering getting a credit card for the first time, then it is likely you are already familiar with using a debit card. However, you should bear in mind how to adequately use your new method of payment. 

Avoiding scams during debt management efforts

The fear of losing one's home is a serious matter for Tennessee residents who are facing ongoing debt issues. Often, individuals or families have saved for many years to afford a home of their own. Once that goal has been reached, the house becomes a significant source of pride. Facing the risk of foreclosure can be extremely distressing, and can lead many reasonable people to follow a debt management path that leads directly toward a scam.

Unfortunately, there are plenty of individuals in the world who look to profit from the misfortune of others. An example is found in the case of three people who were recently sentenced for their roles in defrauding distressed homeowners. The three were part of a company known as Star Reliable Mortgage. They offered to assist homeowners through a "loan elimination" program.

Will Chapter 7 bankruptcy destroy retirement savings?

Deciding how to address overwhelming debt can be a challenge, especially for Tennessee residents who are approaching retirement age. Understanding how a Chapter 7 bankruptcy filing will impact retirement savings is a top priority for many consumers, and an important part of the decision-making process. The following information is offered to assist consumers in understanding how their retirement savings will be impacted by bankruptcy.

When it comes to employer-funded retirement accounts, there is a federal law known as the Employee Retirement Income Security Act (ERISA) that was put into place to protect workers from losing their hard-earned savings. According to the ERISA, 401(k) accounts and other retirement vehicles that are employer sponsored are protected from loss during a personal bankruptcy. When collecting information on retirement savings, be sure to note which type of account is used.  

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