Many Tennessee residents are having a tough time financially in 2023. Personal bankruptcy filings have increased by 20% over the previous year. Yet, you don’t necessarily have to file for bankruptcy if you find yourself in financial trouble. Consider alternatives before your final decision to file.
What is driving bankruptcy filings?
Both common types of bankruptcy filings have increased, with Chapter 7 increasing by 13% and Chapter 13 rising by 24%. Credit card delinquencies are a prime problem, especially for young adults aged 18 to 39. Consumers over two months behind on car loan payments are also driving this trend. Filing for bankruptcy can alleviate financial woes, but the move can also impact credit scores for up to 10 years, making it difficult to buy a home, get a new car and get other big-ticket items.
Viable bankruptcy alternatives
When done correctly, bankruptcy alternatives can help consumers avoid further credit disasters. Consider the following:
- Transfer credit card balances to a 0% interest card
- Consolidate debt through a lower-interest personal loan
- Ask your credit card issuer to lower your interest rate
- Debt settlement, an agreement to pay off a negotiated lower balance
- Debt resolution involving various options
When should you opt for bankruptcy?
Most financial experts indicate most people should only consider bankruptcy filing if they cannot repay unsecured debt within five years. That amount is more than half of their gross income. Bankruptcy filing can lead you toward a better financial future. Although your credit will take a hit, a bankruptcy filing can help save certain personal items. Depending on your bankruptcy type, you can stop repossessions, foreclosures, wage garnishment, credit car harassment, restore utilities, and much more.
Those in financial trouble should beware of scams that can worsen a bad situation. Contact the Better Business Bureau to determine if the debt relief organization is legitimate. Several non-profit organizations, including Money Management International, the National Foundation for Credit Counseling and GreenPath, can help consumers through low-cost credit counseling. Note that getting a fresh start and rebuilding credit takes time to accomplish.