Helping Family with Financial Burdens Leads Some to Seek Tennessee Bankruptcy
For many of us, family comes first. But what happens when helping out your relatives puts you in a financial pickle yourself?
Society often looks at debt as a self-inflicted problem, but many times it's the result of trying to do a good deed, whether it's taking care of parents or grandparents or co-signing a loan for a cousin who's fallen on hard times.
Problem is, when we experience financial difficulty ourselves - say, due to a lost job or medical expense - there's no money left in the bank. As a result, we turn to credit cards and wind up with our own debt burden.
If you're experiencing problems with family and money, Tennessee bankruptcy attorneys may be able to help. Depending on your financial situation, you might benefit from filing for either Chapter 7 or Chapter 13 bankruptcy.
The bankruptcy you file for depends largely on income level. Chapter 7, which has the ability to discharge debt, is mostly reserved for folks earning little to no income. If you've recently lost a job, amassed large medical debts due to injury or illness, or are a single parent struggling to make ends meet, you may qualify for a Chapter 7 bankruptcy in Tennessee.
But what if you have a decent job, but family-incurred debt is making it impossible to pay the mortgage and other bills? Chapter 13 bankruptcy might not historically be as popular as Chapter 7, but it's becoming more widely used thanks to its ability to stop foreclosure. With Chapter 13, you'll need to commit to a debt repayment plan over a period of 3-5 years. In the process, though, assets like your home and vehicles will be legally protected.
Family and money sometimes don't mix, as a recent Wall Street Journal article illustrates. If a relative dies unexpectedly, those closest to them - like spouse and kids - become responsible for their financial burden. When they can't handle it alone, other relatives often jump in to help, from parents to aunts and uncles.
In one case, a man was looking forward to retirement when his son-in-law suddenly died of an aneurism, leaving his wife - the man's daughter - responsible for the hundreds of thousands of dollars he'd borrowed for a business start-up. The son-in-law didn't have insurance, and the couple had three young kids. There went the man's peaceful retirement.
In the article, a financial planner urges people to consider what would happen if family members were to die unexpectedly. Would it leave you with their debts? Would you be responsible for the loan you co-signed?
There's nothing wrong with wanted to take care of your own. But you may want to think about encouraging relatives to get life insurance, or purchasing long-term-care insurance for your elderly family members.
A major family crisis can cause major financial problems. If you're bearing a family member's financial burden, a Tennessee bankruptcy may offer a solution.
More Blog Entries:
More Young Adults Struggle with Debt in Tennessee Compared to Older Consumers: January 9, 2012
Will Cousins Cost You? by Kelly Greene, The Wall Street Journal