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Tennessee is among the states with most Chapter 7 filings

Even with bankruptcy rates declining, there are many areas of the country where people struggle with debt. According to a recent report, states in the south had higher rates of bankruptcy than other parts of the country. Tennessee reported the most overall bankruptcies. For people seeking to get out from under the burden of debt, Chapter 7 seems to be the type of bankruptcy that provides the most relief.

If more than half of a person's income is used to pay on unsecured debts, that person may be feeling desperate about his or her financial situation. Additionally, a person who cannot figure a way to pay off the debt within five years, or who is kept awake at night worrying about debt, may be a candidate for bankruptcy.  A Chapter 7 bankruptcy may remove most unsecured debt, such as credit cards, some personal loans, medical bills and utility bills.

Although a Chapter 7 bankruptcy stays on one's credit report for 10 years, this does not mean the person will never have credit again. Having one's debt removed means that person can begin rebuilding his or her credit a little at a time. Some of the ways people start this process are to apply for secured credit cards, to ask someone with good credit to co-sign or to become an authorized user on someone else's card. After a bankruptcy, interest rates will be higher for those seeking credit.

Some areas of the country do little to protect people when creditors decide to seize their assets. In some states, including Tennessee, creditors may be able to garnish wages and seize assets to the point of pushing people into poverty. When people are burdened by debt, they may decide that a fresh start is the best answer. It is then they turn to a bankruptcy attorney who will answer their questions about Chapter 7 and help them determine if this is the best course of action for them.

Source: nerdwallet.com, "States and Counties With the Highest Bankruptcy Rates", Courtney Miller & Laura McMullen, Aug. 8, 2016

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