Tennessee Bankruptcy Lawyers Blog

Federal and state governments have struck a historic $26 billion dollar settlement with banks accused of wrongfully handling foreclosures.

Of the total, $146 million is earmarked for Tennessee, according to the Memphis Business Journal.

The five big banks involved in the deal were part of a nationwide investigation of improper foreclosure practices in which mortgage servicers used robo-signed documents and other potentially incorrect information to unfairly throw people out of their homes.

By hashing out the agreement, lenders were able to avoid criminal prosecution.

Money resulting from the settlement is intended to help prevent more foreclosure problems, ease the current mortgage mess, and assist some of those who lost their houses.

Unfortunately, Tennessee bankruptcy lawyers say it may not do much good for those who need it most.

Most of the money is being distributed to help state and local government agencies better enforce fair lending practices. If successful, this is good news for those buying a house in the future - but it doesn't do much for people who have already been thrown under the bus by lenders.

It's estimated that about 750,000 borrowers who can demonstrate they lost a home to improper foreclosure between January 2008 and 2011 could qualify for receiving a check for up to $2,000.

However, in order to qualify, your mortgage must have been serviced by one of the five participating banks - Bank of America, Ally/GMAC, Wells Fargo, Citi, or JPMorgan Chase.

The settlement can't be used for loans serviced by Fannie Mae and Freddie Mac, which together make up about half of mortgage debt in the United States.

For most borrowers, the settlement is too little, too late. But that doesn't mean borrowers are out of options.

Whether you're in danger of missing your first mortgage payment or the bank has already started the foreclosure process, filing for bankruptcy in Tennessee can protect your home.

For those who have already lost a house, bankruptcy may be the best way to eliminate credit card debt, get back on your feet, and - once you've successfully met the requirements of bankruptcy - improve your chances of qualifying for future loans.

With Chapter 13 bankruptcy, homeowners are able to make affordable payments over a period of 3-5 years. With the burden of unsecured debt gone, meeting obligations such as the mortgage payment may become more manageable.

Continue reading "Tennessee Bankruptcy Can Assist Mortgage Holders Not Helped By Bank Settlement" »

More Tennessee residents are taking out personal loans to pay down debt - but while some borrowers are finding relief, others end up exacerbating their debt problem.

After falling out of favor during the recession, personal loans are once again being handed out by lenders for everything from kitchen remodels to debt consolidation, reports The Wall Street Journal.

With tighter lending standards and low real estate prices ruling out the possibility of a home equity loan for many homeowners, lenders see personal loans as a way to grow their business. Banks mailed out 424.8 million offers for personal loans in 2011, compared to just 290.5 million in 2010.

Personal loans don't come cheap, but they can be more affordable than credit cards. A typical interest rate for a borrower with good credit is between 9 and 15 percent for a five-year personal loan, whereas interest rates on credit cards are often more than 20 percent.

Some banks are sweetening the deal further by issuing "debt consolidation specials" with rates as low as 6.5 percent if customers agree to allow their payments to be directly deducted from their accounts.

For consumers committed to paying off debt, a personal loan may provide a solution. But Tennessee bankruptcy lawyers have also seen debt consolidation loans make a bad situation worse.

Many Americans have relied on credit cards to make ends meet during the recession. When our paychecks didn't cover car repairs, doctor's bills, or phone bills, we paid for them with plastic.

Unfortunately, leaning on the crutch of credit can be a hard habit to break. This is where Tennessee bankruptcy comes in handy.

People who take out debt consolidation loans or transfer credit card debt to a card with a lower rate often continue racking up debt. As debt continues to grow, the lower interest rate offers little relief.

Sadly, many people with personal loans find themselves burdened with new credit card debt on top of loan payments.

Consolidating debt is just another term for moving debt around. If debt is running your life, rearranging it isn't enough - you need to eliminate debt. Filing for bankruptcy in Tennessee provides the power to do just that.

Continue reading "Debt Consolidation Loans Make a Comeback, but Tennessee Bankruptcy May Offer Smarter Solution" »

With debt, as with so many other struggles, the first step to finding a solution is identifying what is causing the problem.

Tennessee bankruptcy attorneys often observe that - despite the different homes, jobs, and lives of the millions of Americans currently balancing large debt burdens - the root reasons for debt come down to just a handful of scenarios.

Bankrate.com recently highlighted the top causes of debt - some within our control, some not.

Money Management

Often debt accumulates as a result of consumer behaviors.

It should come as no surprise that many of us grow up with some degree of financial illiteracy. Schools today don't teach money management. Most of us were raised watching our parents pull out a credit card to make purchases. By the time we're in college, creditors are lining up to give us our first taste of plastic. The result is a lost generation of wayward spenders.

It all comes down to simple math: spend more than you earn, and you end up with debt.

Perhaps you spend more than usual during your holiday shopping spree but fail to save more than usual the next month. Maybe you don't have a budget, so you end up spending more some months than others, without ever recognizing the pattern. Maybe you don't have a savings plan, and surprise expenses force you to reach for the credit card.

Whatever the reason, debt ends up filling in the gap.

Organizing your financial information and creating a monthly spending plan is the best way to get expenses in line with earnings. It may not help you cover the bills, but at least you'll know where you stand.

Limited Income

More than ever, people are accumulating debt because of reduced pay or unemployment. When hours are cut or a job is eliminated, consumers feel they have no choice but to turn to credit to make ends meet.

The problem is that many workers who have recently become underemployed don't reduce spending because they view their situation as temporary. When a few weeks with a smaller paycheck turns into a few months, credit card debt snowballs. Throw payday loans with ultra-high interest rates into the mix, and you can really end up in a pickle.

Having an emergency savings to fall back on can prevent a short income loss from becoming a long-term burden. Unfortunately, few Americans have enough savings to make it longer than a month without pay.

When income is limited and debt is high, Tennessee bankruptcy can help people keep their heads above water. Unlike Chapter 13 - which requires a payment plan - Chapter 7 bankruptcy can eliminate debt for people with little income. Tennessee bankruptcy lawyers have seen many clients have their unsecured debt wiped out entirely.

Unexpected Expenses

Even a steady job can't protect us from surprise expenses. The reality is that people get divorced, sued, and sick or injured every day. The resulting legal and medical bills can easily total tens of thousands of dollars and bury consumers under a burden of debt for years.

But while it may not be feasible to prevent these expenses, we can control how we deal with them.

If possible, negotiating an affordable payment plan is a better solution than putting it all on a credit card. However, if a payment plan isn't an option, you need a plan for paying down that credit card balance. Making minimum payments and ignoring the bulk of debt is only going to make the problem worse.

Bankruptcy was developed specifically for helping consumers pay down unsecured debt caused by credit cards, medical bills, and legal fees. Filing for bankruptcy in Tennessee has the ability to eliminate debt at any point - but the sooner you file, the sooner you can lower bills and start keeping your hard-earned dollars for yourself.

Continue reading "Common Causes of Credit Card Debt in Tennessee " »

After a few years of cutting costs and trimming budgets, it appears that Tennessee consumers are once again slipping back into debt.

The average Tennessee resident now owes $24,043 in credit cards, personal loans, and auto loans - a $500 increase over last year, according to credit reporting agency Experian. Residents in Middle Tennessee areas including Nashville have a slightly higher average debt load of $24,152.

Higher levels of debt can mean one of two things: Either consumers are feeling more confident in their ability to spend, or they're falling back into the bad habit of spending more than they're earning.

Some financial experts fear it's the latter.

Those who have struggled to stay afloat since the recession arrived may finally be falling behind. With costs rising and wages falling, people who were formerly living paycheck-to-paycheck are falling back on credit cards.

According to The Tennessean, U.S. wages rose just 0.9 percent in 2011, while inflation increased by 3.2 percent. Savings dropped from 5.3 percent in 2010 to 4.4 percent in 2011.

But despite the recent return to debt, the average Tennessee consumer still managed to reduce personal debt by $2,000 between 2007 and 2010. That's compared to just an $800 reduction by consumers nationwide.

A portion of the debt decrease may be due to bankruptcy filings. Tennessee had the country's third-highest personal bankruptcy rate last year, according to the article.

Unlike credit counseling and debt consolidation, bankruptcy is the only debt-fighting tool legally created with the consumer in mind. Filing for bankruptcy in Tennessee has the power to substantially reduce or eliminate debt, stop wage garnishments, and halt harassment from debt collection companies.

Of course, some of the state's lowered debt levels can be attributed to consumers prioritizing their credit card payments over mortgage payments - a practice that can eventually result in foreclose.

Homeowners who qualify for Chapter 13 bankruptcy can kill two birds with one stone. Chapter 13 legally stops foreclosure while setting up a payment plan to help consumers lower debt. After the mandatory 3-5 years, any remaining debt is discharged free and clear.

The bad news is that the economy may continue to get worse before it gets better. The good news is that Tennessee bankruptcy can allow consumers to do something about it.

Continue reading "As More Consumers Slip Back Into Debt, Tennessee Bankruptcy Offers a Solution" »

Think the top cause of divorces and breakups is infidelity? Think again.
It turns out that financial unfaithfulness is one of the leading reasons for relationship problems.

Yet more than 80 percent of married people copped to hiding financial information from a spouse - be it a credit card balance, a purchase, or a separate bank account, according to a survey by CESI Debt Solutions. In a poll by the National Endowment for Financial Education, 16 percent of those who lied about finances said their money problems resulted in divorce.

Perhaps the best Valentine's Day gift for your significant other is not spending money on that box of chocolates.

Even better, perhaps you can take the time to sit down and talk about solutions to your debt - such as filing for bankruptcy in Tennessee. It's not the most romantic conversation, but it just might save your marriage.

While any amount of financial difficulty can put a strain on a relationship, it's hidden debt - for instance, when one spouse makes secret purchases or maintains a separate credit card - that takes the biggest toll.

Time and time again, Tennessee bankruptcy lawyers have seen couples become buried under a sea of debt because one partner kept secrets instead of seeking help.

As time goes on, the secret-keeping partner's financial troubles may snowball as they attempt to manage finances alone. Bearing the burden can leave them feeling overwhelmed, depressed, and lonely. Meanwhile, the spouse being lied to often knows something is up - and when the secret is out, they are likely to be resentful, angry, and suspicious of their partner's activities.

In worst case scenarios, people have opened credit card accounts in their spouse's name. However, just being married can make you liable for your partner's debt in most states, whether or not your name is affixed to their bills.

While there's no easy solution to existing debt, talking about the problem is the only way to make progress. Living in denial is no way to spend a marriage.

Even if one person handles the finances, both partners have the right to know how the couple's money is being spent and saved. Two heads are better than one, and handling a stressful financial situation together - as opposed to separately - can provide the combination of brainpower and moral support needed to get through a difficult time.

When lowering debt requires much more than simply rearranging a budget, Tennessee bankruptcy may be a solution.

In the meantime, here's some advice from CNN Money on preventing and dealing with problems money in a relationship.

Get Your Priorities Straight

Engaged? Make time to discuss your current financial situations and future financial goals as a couple before you walk down the aisle. Marriage complicates financial matters. While it's definitely possible to overcome debt together, most people never overcome financial incompatibility. This is the time to make sure you are on the same page about financial priorities, as your money moves as individuals will affect you both once you're legally married.

Look for Financial Red Flags

Debt has a tendency to keep growing. The sooner you both acknowledge a problem forming, the sooner you can figure out how to solve it. Have you noticed your partner relying on credit lately? Are new bills showing up, some for purchases you didn't know about? Are there shopping bags in the closet? Does your spouse get irritable when you ask questions about your finances? You may need to stage a financial intervention. While many people hide their financial problems because they're scared or ashamed, bankruptcy can often eliminate debts in the toughest of situations.

Hold Family Money Meetings

Prevention is the best medicine. If you make a point from the beginning of your marriage to go over your finances together once every month, quarter, or whatever timeline works for you, an incentive for honesty is created. It's fine if one partner handles financial tasks, but both should be aware of how the money is being spent. One way to start is by getting copies of your free annual credit report.

Continue reading "Hidden Credit Card Debt Strains Tennessee Marriages" »

In the popular game Monopoly, a bank error in your favor usually works to your advantage. In real life, that's unfortunately not the case.

In a disturbing trend, a growing number of homeowners are finding themselves in foreclosure after a bank mistakenly marked their mortgage as delinquent. As a result, borrowers who have never missed a payment - and, in some cases, have paid off their homes in full - are ending up with tarnished credit and in lengthy and expensive court battles to save their homes.

Much of the problem stems from improper recordkeeping during the real estate boom times of the early-to-mid-2000s, when Wall Street pushed lenders to process mortgages quickly and sloppily so they could be broken up and sold to investors all over the globe.

Crucial legal procedures were often overlooked. Later, these same companies began forging documents and faking titles so they could foreclose on properties despite a lack of proper mortgage documentation.

Tennessee bankruptcy lawyers are aware of several cases in which a homeowner applied for a loan modification, only to be turned down because the bank couldn't locate who held the actual mortgage note.

Without clean records of home loans, banks are making mistake after mistake. It's currently estimated that nearly 13 percent of homes in the United States are either in foreclosure or at least 30 days delinquent. Since there are no statistics on wrongful foreclosures, it's impossible to gauge how many of those homeowners may be falsely accused.

In a recent Reuters article, one family refinanced their home to take advantage of a lower rate, only to learn later that the bank had never closed out the original loan. Even though the homeowners had been making their payments on time, they ended up in foreclosure.

In another scenario, a bank's computer system mistakenly marked a Utah woman delinquent on a mortgage for a house she sold years earlier. By the time the woman's accountant got wind of the problem, it had already been reported to credit bureaus and damaged the woman's credit score.

The majority of foreclosures still occur because homeowners can't afford to make payments, whether it's due to an unexpected expense, a surprise job loss, or a mountain of credit card debt. But now it appears that even following the rules may not get you off the hook.

No matter how it happens, foreclosure has the ability to ruin your credit, prevent you from qualifying for affordable rates or new loans, and, of course, strip you of assets like your home. On top of your original missed payments, you may also owe fees and expenses from your delinquency.

In many cases, Tennessee bankruptcy may be a saving grace.

Filing for Chapter 13 bankruptcy can legally halt foreclosure while you get the kinks worked out. Meanwhile, a bankruptcy court can establish a repayment plan for unsecured debts like credit card bills, which can relieve some of the financial pressure for homeowners previously struggling to make loan payments.

Continue reading "Tennessee Bankruptcy May Relieve Rise in Foreclosures Caused by Bank Errors " »