As 2014 opens, the U.S. economy is showing signs that it has begun its slow recovery from the Great Recession that began in 2008. However, some parts of the country are bouncing back less quickly than others. Tennessee residents are still struggling more than those in the rest of the U.S. Tennessee led the country in the number of bankruptcy filings for 2013, even though bankruptcies declined in the state from the previous year.

Tennessee bankruptcies falling

Tennessee bankruptcy filings for 2013 continued the four-year downward trend from the high they reached in 2009, according to statistics from the U.S. Bankruptcy Court. In 2013, 6,515 business and consumer bankruptcies were filed in Chattanooga, which represents a 1.9 decrease from 2012 and a 23.3 percent drop from the high point in 2009. Foreclosures also dropped in Tennessee in 2013. Hamilton County saw a 15.3 percent fall in foreclosure.

However, the progress that Tennessee made in these areas pales compared to the nation overall. Bankruptcies in the U.S. overall declined 13 percent in 2013 from 2012, with about 1.03 million people in the U.S. filing bankruptcy, as reported by U.S. Bankruptcy Courts. Total bankruptcies in the U.S. in 2013 fell to the lowest levels since 2007. CoreLogic reports that foreclosures in November 2013 were down 29 percent from the rates in November 2012.

Tennessee bankruptcies still higher than rest of U.S.

Some characteristics of Tennessee make the state persist in higher than average bankruptcy filings. Tennessee tends to be a very pro-creditor state, with its laws allowing creditors to recover money from people more easily than in other states. One offshoot of Tennessee’s creditor-friendly climate is that people who file for bankruptcy in Tennessee are more likely to file Chapter 13 bankruptcy, where creditors recover more from bankruptcy filers, than in other states. Bankruptcy Court records show that 58 percent of bankruptcy filings in Chattanooga were Chapter 13 filings, compared to 30 percent in the U.S. as a whole.

Additionally, the state does not require mortgage lenders to go to court to begin foreclosure actions as is required in other states, so it is easier for lenders to foreclose on homes in Tennessee. Many people use the automatic stay on collection actions that bankruptcy provides as a way of fending off foreclosure.

Working conditions also contribute to high bankruptcy rates. Tennessee has at-will employment, meaning that employees can be fired for no cause. This leads to high turnover and low wages in the state. Overall, the state has low education levels, with fewer college and high school graduates than in other states. Low wages coupled with the fact that the state’s main tax revenue is from sales and property taxes, rather than income taxes, means that poor people bear a disproportionate tax burden, which causes financial strain for those already struggling.

Seek legal assistance

Many in Tennessee are still struggling financially, even though the economy is beginning to recover across the U.S. overall. Those who are in serious financial difficulties and are unable to pay their bills should consider seeking the protection that bankruptcy can provide. If you have questions about whether bankruptcy is appropriate for your circumstances, speak with a skilled Tennessee bankruptcy attorney today.

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