When Tennessee residents are facing financial issues, they may consider many options in an effort to get a better handle on their debt. In some instances, individuals may create a deferred payment plan with a lender that allows them to make payments at a later time than originally intended. However, if individuals have entered into such a plan and also want to file for bankruptcy, they may wish to determine how the deferred payments could affect their cases.
Because bankruptcy requires creditors to have no contact with the borrowers, individuals may use this option to halt foreclosure or other similar actions. However, the deferred payment plan, also known as forbearance, is a contract between the borrower and the lender, and bankruptcy may be considered a violation of the contract. As a result, lenders may have the option to work toward removing the protection that bankruptcy provides.
On the other hand, if individuals have not entered into any form of forbearance, bankruptcy could be a useful tool for financial assistance when used correctly. Chapter 13 allows for individuals to use a repayment plan over the course of 3-5 years, but it is important to note that individuals may not take on new debt during that time. Chapter 7 is also another option for individuals who may qualify for liquidation bankruptcy.
If individuals are concerned about filing for bankruptcy due to a forbearance or other factors pertaining to their financial situations, it would be wise to consult with an experienced bankruptcy attorney. Tennessee residents may benefit from gaining further information on how the filings could impact their cases and whether they may qualify for Chapter 7 or Chapter 13 bankruptcy. Though it is common to have concerns when taking such a significant step, this debt relief method may be able to help parties get back on stable financial ground.
Source: thesequitur.com, “Considerations of Forbearance in Bankruptcy”, May 17, 2016