Nashville Bankruptcy Blog

When parents with minor children divorce, in Tennessee or elsewhere in the country, questions of child custody can quickly become contentious. The couple may enter the divorce process with the best of intentions, but disagreement is at times inevitable.

For some couples, disagreement can be resolved through negotiation or other dispute-resolution techniques. For others, however, the conflict may simmer, boiling over into the children's relationship with the parents.

What Is Parental Alienation Syndrome?

Parental alienation syndrome is a controversial concept that details the changing relationships between divorcing parents and their child. Even when there is no strong reason for alienation, such as abuse, the child becomes the ally of one parent and rejects the other parent. This is due to the strong influence of one parent over the child's preferences and perceptions.

While some researchers and writers advocate for parental alienation syndrome as a widely accepted diagnosis, others argue that the concept lacks validity. Whatever the outcome of the debate, the syndrome seems to be gaining traction in the national consciousness.

The burden of student loan debt is felt by numerous former students these days. Whether they are in Tennessee or elsewhere in the country, many of them have wondered whether their student loans could be discharged during bankruptcy.

As is the case with many legal questions, the answer is: It depends.

While student loans are notoriously difficult to discharge in bankruptcy, it may be possible to do so in certain situations. For many courts, the standard is whether the student loans are causing the debtor "undue hardship."

Undue hardship is not a term that courts take lightly. Many courts use the Brunner test, whose name is taken from an influential case. To measure whether a person has truly shown undue hardship, the court must see that:

• The debtor cannot maintain a minimal lifestyle for himself or herself and dependents, if any.
• These circumstances are unlikely to change for a significant part of the student loans' repayment period.
• The debtor has demonstrated, through good faith efforts, attempts to repay the student loans.

During 2010, individuals in the United States filed over 1.5 million bankruptcy petitions, 71 percent of which were Chapter 7 filings. Though the economy has been particularly tough in recent years, hope is on the horizon as financial experts report that bankruptcy filings are on the decline.

The National Bankruptcy Research Center (NBRC), which serves as one of the premier sources for the most current bankruptcy research and statistics, published findings that January filings were down from the previous year. In February, March and April 2011, the NBRC found that filings continued to decline nationally.

However, Georgia, Utah, Tennessee and California have experienced a higher rate of bankruptcy filings than the national average in 2010.

A recent study, authored by Dr. David Himmelstein, highlights the effects of medical bills on bankruptcy filings. The study, titled "Medical Bankruptcy in the United States, 2007: Results of a National Study 2007" finds that in 2007, 62.1 percent of all bankruptcies were caused by high medical expenses.

Among other things, Dr. Himmelstein cautions that state legislators, looking for somewhere to further cut budgets in light of record deficits, should not cut medical benefits.

The 62 Percent Rate Calculated Before the Great Recession

The warning is based on the results of the study, which showed a 49.6 percent increase from 2001 to 2007 in medical bankruptcies. This means there was a large increase even before the great recession began.

The study implies bankruptcy filings caused by high medical expenses will continue to rise in 2010 and 2011.

With many people's insurance coverage inadequate and many more people losing their jobs, medical bills will force many more people to file for bankruptcy.

As this blog is being written, the Tennessee legislature is attempting to make it easier for banks and mortgage holders to foreclose on your real estate in Tennessee. They are attempting to do this by reducing the amount of notice required before foreclosing on your real estate or home. Here's how it works:

Most mortgages in Tennessee are actually deeds of trust. This is a legal device that allows the lien on your property to be held by a trust. The trustee or substitute trustee (usually one law firm handles the original loan and deed of trust when you bought the house or refinanced and a different law firm handles the foreclosure sale, hence the "substitute" trustee) is allowed to sell the real estate/home if the borrower/homeowner violates the terms of the trust upon 20 days' "public notice." Missing one or more payments on the promissory note and security agreement is normally the event(s) which triggers the default clause and causes the creditor/mortgage to try to sell the property at foreclosure to get their mortgage loan paid back with the sale proceeds.

The economic downturn and the effects of subprime mortgage practices have sent many to the brink of financial disaster. With foreclosure looming, bankruptcy remains a viable option for some debtors to keep significant assets while getting a clean slate.

Automatic Stay

Those who file for protection under the Bankruptcy Code gain the advantage of an automatic stay, so named because it takes effect immediately upon filing and it puts a hold on collection actions. Creditors must suspend efforts to collect debts unless they seek and are granted relief from the automatic stay. The automatic stay applies to all collection actions, including actions to repossess vehicles, furniture or other assets, and actions to foreclose home mortgages.

Over the past few years, the U.S. economy has struggled through one of the most challenging times since the Great Depression. According to the National Bureau of Economic Research, the "Great Recession" as many economists are calling it, began in December of 2007 and ended in June of 2009, a year and a half after it began.

During this time, more and more consumers began to carefully examine where and how they spent their money. A recent Time Magazine article notes that 78 percent of Americans changed their shopping habits during the recession. Nearly a year and a half later, the shopping patterns that many people developed during the recession are expected to linger for some time to come.

While consumers backing off high-end luxury goods was expected, many shoppers are saving money on essential items, including groceries, by doing more research before they hit the stores and changing where they shop altogether. Retail Forward, a leading consumer research firm, found that one in five shoppers changed grocery stores over the past few years to save money.

The decision to file for bankruptcy is often fraught with stress and anxiety. Consumers who choose to file for bankruptcy are usually overwhelmed with debt and see no other option but to file for either Chapter 7 bankruptcy or Chapter 13 bankruptcy.

Many who choose to file for bankruptcy, however, forget the benefits of bankruptcy. Bankruptcy is an option for struggling Americans as a way to provide a financial fresh start. Individuals who file for bankruptcy have often tried without luck to pay their debts outright and the legal process of bankruptcy allows the individual to eliminate all or a portion of debt.

The process for filing bankruptcy involves the discharge or repayment of debt under the supervision of a judge. Relying on the advice of a bankruptcy lawyer often helps the process of bankruptcy move more smoothly, as the court will need to see significant documentation about the individual's assets, liabilities, debts, income and other financial information.

If you have lost control of your finances and are struggling with debt you cannot pay, you may be considering filing for bankruptcy protection. If you are over 62 years of age, you have another option beside bankruptcy, known as a reverse mortgage. Which one of those choices you select depends on many facts specific to your situation.

What Is A Reverse Mortgage?

A reverse mortgage is a financial instrument that allows you to extract the value (equity) out of your home, in much the same manner that a traditional mortgage puts equity into your home by your monthly payments.

With this contract, you would typically receive monthly check from the reverse mortgage holder, for a specified period. It has the advantage of providing you will a steady cash flow, allowing you to augment your income and pay your debts.

With the approach of the fifth birthday of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the American Bankruptcy Institute sponsored a teleconference between bankruptcy attorneys, law professors and judges to discuss the legislation's impact. Many regard the 2005 amendments either as a response to reports of abuse of the bankruptcy system or to lobbying efforts of the banking industry and other special-interest groups. The amendments have, however, had unintended consequences - and not all of them are positive.