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New Tennessee Law Gives Advantage to Debt Buyers

A new Tennessee law went into effect on July 1 that will likely make it easier for debt buyers (succeeding creditors) to prevail in lawsuits against debtors.  Debtors had often successfully relied on the defense that a debt buyer’s written record of their debt was hearsay.  Only the records of the original creditor passed the hearsay test.  If it’s inadmissible hearsay, it’s excluded at trial.  Unless the debt buyer could produce a witness from the original creditor to testify about the records, the debtor had a great advantage.

The new law states that under certain circumstances the debt buyer’s witness will be able to testify regarding the records as if they were the records of the original creditor.  The law states that these kinds of records may now be submitted under the Tennessee Rules of Evidence business records hearsay exception.  However, records may still be excluded if they “lack trustworthiness” through some indication of shoddy preparation or suspicion of source.

See the full text of Public Chapter 186 here.

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Should You File Bankruptcy With Your Spouse?

Maybe.  It depends on whether your debts are joint or separate.  If you and your spouse have joint debt, but you don’t file and obtain the bankruptcy discharge along with them, the creditors can come after you.  In that situation, your spouse’s bankruptcy can turn out to be a waste of time and resources. 

On the other hand, there is no need to file if the debt is separate and you have nothing to list.  Sometimes a married couple chooses to and is able to maintain separate finances. One spouse’s separate property, owned or earned before a marriage, will generally not be effected by the other spouse’s bankruptcy.

Your attorney will need to know the incomes from everyone in the household in order to properly complete your Means Test.  In that sense, your spouse will effect your bankruptcy even if they do not ultimately file with you.  Also, the state you live in will effect your course of action because states differ on how community and separate property are classified and treated in a bankruptcy.

Two critical steps when meeting with your bankruptcy attorney are to identify (a) who your creditors are and (b) whether the debt is joint or separate.  Deciding to file bankruptcy can be difficult, as are the effects of financial stress on a marriage.  Contact a bankruptcy attorney to discuss your options.

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