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Tennessee bankruptcy filings may be declining

According to a recent report, the number of consumers filing for bankruptcy or seeking other court protection from creditors declined by 13% in the first half of 2012. That's good news for consumers in Tennessee, which at 6.99% ranks among the top 5 states in the country for per capita bankruptcy filings of all types, including Chapter 13.

The executive director of the American Bankruptcy Institute believes the report may indicate that that the country is on track for the lowest new bankruptcy filings since the beginning of the financial crisis in 2008. The director attributes the decline to low interest rates maintained by the U.S. Federal Reserve.

Of course, a need for bankruptcy law remains even in strong financial times. When a consumer is facing unmanageable debt, bankruptcy procedures can provide a fair way to treat creditors. Although Chapter 7 liquidations perhaps get more publicity, Chapter 13 filings are also a valid option for many consumers.

If you have assets you want to keep, rather than liquidate, a Chapter 13 filing may make sense for you. A consumer in that scenario might have equity in his or her home and enough income to continue making some payments to creditors. Although some debts may be discharged or modified in a Chapter 13 proceeding, many other debts will be provided for in a court-approved payment plan. Such a plan typically permits an individual to catch up on delinquent payments over the course of 3 to 5 years. At the end of that period, your remaining debt may be discharged and you typically won't have to surrender any assets.

If you are facing foreclosure, repossession of your motor vehicle, or other collection actions by creditors, an attorney can explain how bankruptcy filing can make your debt more manageable and give you time to catch up on back payments.

Source: Huffington Post, "U.S. Bankruptcies On Pace To Fall To Pre-Crisis Levels," July 6, 2012

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