Bankruptcies have fallen to a 10-year low in Tennessee, but the state still leads the nation in bankruptcy overall. A Jan. 15 report states that Chattanooga saw the lowest number of bankruptcies in over a decade while local foreclosures also hit the lowest numbers since 2000. Despite this, Tennessee still leads the country for the number of businesses and households filing for bankruptcy. Experts don't expect that to change in the future; interest rates are rising, and borrowing is increasing. Both create a perfect storm for bankruptcies in the future.
In Hamilton County, property foreclosures dropped by close to 27 percent in 2016. The number of foreclosures actually completed fell to half of what it was during the Great Recession. Rising home prices are suggested as spurring on refinance options that helped many homeowners handle their debts without bankruptcy.
Homes have appreciated by around 7 percent, adding on around $12,500 in home equity on average. Growth in the value of the homes helps the owners have more spending power, reducing the number of homes going into default.
In Chattanooga, the bankruptcy court found that around 61 percent of bankruptcies were Chapter 13 petitions, which allow homeowners and consumers of all types to restructure and repay their debts, helping them avoid foreclosure. A Chapter 13 bankruptcy gives people more time to may payments, helping them get back on track without the stress of liquidating assets.
As the economy improves, it's hoped that the number of bankruptcies and foreclosures will continue to fall. However, if you find yourself in a bind, looking into your legal options may be the best option to help you get out of debt.
Source: Times Free Press, "Bankruptcies fall to 10-year low, but Tennessee still leads nation in going broke," Dave Flessner, Jan. 15, 2017