Tennessee led the nation in bankruptcy filings last year with 36,052 filings – more than twice the national average. Several factors contribute to the state’s high filing rate.

One reason is that Tennessee is creditor-friendly and makes it easy for creditors to quickly garnish wages and foreclose on properties, explains bankruptcy attorney Larry Ahern, a partner at Brown & Ahern and an adjunct professor at Vanderbilt Law School.

That leaves a consumer with few options but to declare bankruptcy.

Studies have shown a correlation between state policies that allow lenders to seize assets quickly and high bankruptcy rates.

“You get a judgment for credit card debt, and the creditor can get a hold of your wages – that tends to have a more immediate impact and drive people fairly dramatically into bankruptcy, as compared to a state where garnishment can be delayed,” Ahern explains.

“In a state like Tennessee, where there is this relatively unfettered ability to garnish wages, that tends to correlate with high filings.”

The same is true with foreclosure, he adds. Foreclosure is a non-judicial process in Tennessee, and trustees named in the deed of trust for a home can simply publish a foreclosure notice in a newspaper such as The Ledger and sell the property within three weeks.

“It’s very difficult to slow that process down except by filing bankruptcy,” Ahern says.

Another factor is Tennessee’s lack of regulation of the payday lending industry, which can lead consumers already on the financial edge into a “debt trap” of high fees and interest rates that drive payments up into the triple-digits.

“A lot of states have put into place restrictions about payday lending. Tennessee is not one of them,” says Natasha Bishop of Apprisen, formerly known as Consumer Credit Counseling Service of the Midwest. “They’ve made some caps but the industry is innovative.”

Tennessee was one of the first states in the nation to legalize a new payday lending product called the “flex loan.” These lines of credit that can carry fees of up to 279 percent (annualized) if borrowers don’t pay it off quickly.

Bishop says increased regulation of the credit card industry has had a positive result. Younger clients seeking financial counseling have less credit card debt than previous generations, thanks to restrictions that now limit credit card marketing on college campuses, she says.

But millennials are making more use of alternative lending sources such as pawn shops and payday loans, she warns.

“They are generally used for emergencies and, in the majority of cases, are paid back within the timeframe,” Bishop says of payday loans.

“It’s when people roll it over multiple times that it begins to get into that cycle of debt.”