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Knoxville Bankruptcy Law Blog

Americans continue to fall behind on certain debt payments

In the midst of a global pandemic and economic hardship, it is not surprising to hear that many Americans are struggling financially. This is a difficult time for many Tennessee consumers, and many families are unable to make payments on some of their monthly expenses. Studies find that people are falling behind on their auto loan payments, credit card debt and other obligations. 

Even after many received stimulus checks from the government, it is becoming more difficult to get ahead and pay off credit card balances. You may be one of the millions who are having a hard time right now, and you may be wondering if there will ever be an opportunity to regain your financial footing. For some overwhelmed consumers, there are some legal options available.

What are the ways to make wage garnishment stop?

It can be extremely frustrating when a Tennessee employee does not receive the normal amount of pay because the employer has to withhold a certain amount according to a court order. Wage garnishment can happen when the employee is past due on payments for certain types of debts, and the creditor took steps to collect after other attempts failed. A consumer who is facing wage garnishment may find it helpful to learn about the ways to make it stop.

When a consumer is not getting his or her full paycheck, it can make it nearly impossible for that individual to make ends meet each month. It will be nearly impossible to ever get ahead with debt payments, and it can result in even more financial difficulties. In addition to these complications, it can can be embarrassing for an employee when the employer has to start withholding a portion of the paycheck. At this point, it could be prudent to consider the benefits of filing for bankruptcy.

Negotiating credit card debt into a reasonable settlement amount

Tennessee consumers may find themselves struggling with overwhelming credit card balances for many reasons. Difficult financial circumstances can make it impossible to manage payments, even minimum payments. Because of accumulating interest, a few missed payments can result in balances that are too high to manage. At this point, a cardholder may want to explore the option of negotiating the credit card debt down into a reasonable settlement amount.

There are times when a credit card company is willing to negotiate with a cardholder when his or her balances are too high and there have been multiple missed payments. Since the company owns the debt, everything from the amount of payments to the interest rate is negotiable. It may be possible to reach a total amount that the consumer can pay in full, allowing both sides to reach a satisfactory conclusion. 

What happens if credit card debt is sent to collections?

When a Tennessee consumer is unable to manage his or her credit card bills, the credit card company may send the debt to a collections agency. Before sending credit card debt to collections, the card company may call to attempt to collect. This often happens when the cardholder is at least 30 days behind on making a minimum payment. After months of unpaid balances, it will likely be sent to an agency dedicated to collecting past-due balances.

No matter how much a consumer owes, there are limits to what a debt collections agency can do. The agency cannot threaten the cardholder, harass, make false statements or use obscene language when on the phone with the individual. Some cardholders who are behind with their debt may be able to work out a payment plan with the collections agency.

Dealing with credit card debt with a balance transfer card

For many Tennessee consumers, using credit cards is a way of life. People use their cards daily for purchases ranging from emergency medical bills to groceries. Swiping a card is a financial strategy for those who do not have the savings to manage some types of expenses. The end result is often an amount of credit card debt that is overwhelming and unmanageable.

Those with this type of debt may consider applying for a balance transfer card as a way to deal with their credit card balances. These cards allow a consumer to move his or her balances to one account, and it's possible that this could result in easier payments and lower interest rates. This may seem like a reasonable way to regain control over credit card balances over time, but like any type of financial decision, it's prudent to weigh the benefits against the potential drawbacks.

Should you file for bankruptcy before or after getting married?

Getting engaged is an exciting experience. You likely cannot wait to get the wedding planned and to walk down the aisle to say, "I do." Of course, before the wedding takes place, you and your future spouse may need to have some serious discussions. In particular, you may need to take a look at your individual finances and what your details could mean for the future.

It is possible that one or both of you has a considerable amount of debt. While this does not necessarily mean that one or both of you are bad with money, it could warrant further discussion and brainstorming about what to do to protect both of your financial interests. In fact, it may even be necessary to consider bankruptcy.

Debt management could be the right way to deal with some balances

When a Tennessee consumer is facing overwhelming debt, it can lead to various types of financial complications. One of the most frustrating consequences is the constant contact and attempts at collection by debt collectors and creditors. To make this stop and to deal with various types of unpaid balances, a consumer may consider filing for bankruptcy. While this is a helpful step for many, it is possible there is a better option through debt management.

Every financial situation is different, but bankruptcy may come with the possibility of losing significant personal assets. This is one reason why debt management may be a more reasonable and prudent option. One of the most reasonable alternatives to bankruptcy is to work with creditors on payments. An attorney can work on behalf of a consumer facing debt management issues, seeking lower payments and extending the payment period to provide the client with some relief.

Will credit card debt land a consumer in jail?

There are many consequences that come as a result of owing a significant amount of debt. For Tennessee consumers who have past-due credit card debt, one of the most prominent consequences is dealing with creditors and debt collectors who are trying to collect payment. One method they sometimes employ is scaring the consumer with certain repercussions if he or she does not pay. 

Some debt collector even go so far as to threaten arrest. It's frightening for someone to hear that he or she may end up in jail because of debt. This debt collection tactic is actually outside of the scope of what creditors and debt collectors can do. In fact, it is against the law for a debt collector to threaten a consumer with false consequences. 

Medical debt is a major problem for many Tennessee patients

Medical care is expensive, even for those in Tennessee who have insurance. A hospital stay, prolonged illness or traumatic injury can result in bills that can quickly overwhelm a patient and family. Insurance doesn't always cover every aspect of a patient's care, and the result can be medical debt and mounds of paperwork that can become unmanageable. 

Medical billing and coding is complex. Even if a patient gets care and treatment for a relatively minor reason, he or she can receive dozens of bills for individual services or medical devices. For example, an anesthesiologist may bill separately from the surgeon, and certain instruments may be charged separately. It can be difficult, if not impossible, for a patient to figure out what the charges are for and whether they are accurate. It can add additional stress and trauma for someone already dealing with injury or illness.

Does forbearance actually lead to more credit card debt?

There are many reasons why Tennessee consumers are not able to make timely credit card payments, and it is often because of reasons beyond their control. Whether it is because of job loss, sickness or other reasons, credit card debt can quickly accumulate when there is a reduction in income or unexpected expenses. This may leave some consumers in a place where they want to explore the possibility of forbearance.

Forbearance programs allow consumers to get relief from credit card payments. They may be able to delay payments, avoid late penalties or benefit from a lower interest rate for a limited period of time. The relief from these programs is short-term, and while they may seem beneficial for the immediate future, they may not really pay off long-term. Before entering a forbearance program, it is prudent to consider the potential consequences.

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