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When should you file for bankruptcy in Tennessee? Advice from bankruptcy lawyers in Nashville, TN
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When should you file for bankruptcy in Tennessee? Advice from bankruptcy lawyers in Nashville, TN

If you’re having trouble getting out of debt and your bills keep piling up, it’s important to know that you do have options for debt relief. One option is bankruptcy, but this is usually viewed as a last resort.

How do you know if you should file for bankruptcy or pursue another option? Our bankruptcy lawyers in Nashville, TN, have put together this quick guide that explains everything you need to know:

Consider alternatives to bankruptcy first

Based on your financial situation, you may want to consider an alternative to bankruptcy. This depends on the type of debt you have and how much you owe:

Credit card debt

If your credit card debt has been sent to collections, then it’s definitely worth negotiating with your creditors. In some cases, they may agree to a payment plan that reduces your overall debt.

Your creditors may also accept a lump sum for far less than what you owe. In either case, you can get the debt relief you need without involving the court.

Home mortgage

If you’ve fallen behind on your mortgage payments, don’t fret just yet. Many loan providers offer forbearance programs, which allow you to stop making payments for a certain period of time.

Others allow you to break down the past due amount into smaller payments. Our bankruptcy lawyers in Nashville, TN, recommend calling your mortgage loan provider to see if they offer any of these options first.

Tax debt

Did you know that the federal government may settle with you for a lower amount if you owe back taxes? This program is called an “Offer in Compromise.” If you can otherwise pay the amount you owe through an installment agreement, then you likely won’t qualify.

However, you may qualify if:

  • You’ve filed all your tax returns so far.
  • You’ve made the required estimated tax payments for the current year.
  • You cannot pay your back taxes and you lack enough assets or income that could potentially cover the amount you owe.

When bankruptcy is the best option

If you have large amounts of debt that have become unmanageable, and none of the above solutions help, then bankruptcy may be your only viable option. While bankruptcy can discharge your debt for good, it’s important to know that a bankruptcy will stay on your credit report for about 10 years.

There are various types of bankruptcy, and the best type for you depends on what kind of debt you have, whether you want to keep some assets, and more. Our bankruptcy lawyers in Nashville, TN, often help people file for Chapter 7 and Chapter 13 bankruptcy, which are the most common types.

Here’s how they differ:

  • Chapter 7: With this option, your property is liquidated in order to pay off your debt. Chapter 7 bankruptcy is ideal for those with limited incomes who will likely not be able to otherwise pay off their debt.

  • Chapter 13: This is sometimes called “reorganization bankruptcy.” Instead of selling off your assets, you can consolidate your debt and then make payments under a court-mandated repayment plan.

There are many other factors to consider when filing for bankruptcy, and some debts cannot easily be discharged, such as marital debts and student loan debts. That’s why our bankruptcy lawyers in Nashville, TN, recommend seeking legal help first. A bankruptcy lawyer can help you fully understand your options.

Book a consultation with our bankruptcy lawyers in Nashville, TN

At the Law Office of Morgan Dale, our experienced legal team has guided many people through the bankruptcy process. If you’re overwhelmed by debt, let our experts give you peace of mind.

Contact us today to schedule a consultation with our bankruptcy lawyers in Nashville, TN.