The Burden Of Medical Debts: How Chapter 7 Or 13 Bankruptcy May Help Relieve You Of Your Debts

Posted by on May 5, 2015 in Uncategorized | 0 comments

A common misconception is that poor spending habits and maxed out credit card bills are the biggest cause of bankruptcy in the U.S. Unfortunately, the truth is much more sobering. Studies have shown that medical bills are actually the most common cause of bankruptcy in the U.S. with over 2 million Americans affected in 2013 alone. The cost for medical care in the U.S. is notorious for being expensive, and at times unaffordable, with an ambulance ride of only 200 feet costing as much as $3,421. If you’re having troubles paying your medical bills, you may be able to enjoy some financial freedom by filing for bankruptcy under chapter 7 or 13. Surrendering All Assets Under Chapter 7 To be eligible for filing for bankruptcy under chapter 7, you must pass the means test, which measures your income in comparison to the mean income for the same household size within your city. The means test is designed to ensure that high-income earners cannot take advantage of the bankruptcy act by filing under chapter 7. Once you have been approved for chapter 7 bankruptcy, you must surrender all of your assets to a bankruptcy trustee although there are some exceptions, as you can keep some assets to keep you afloat. Your bankruptcy trustee will negotiate a settlement with your creditors and will liquefy all of your assets to pay them back. Once this is done, you are officially free of all debts. Although some debts, such as alimony payment and student loans cannot be wiped away with bankruptcy, medical bills can, as they are treated as non-priority unsecured debts.  Your personal bankruptcy attorney can help you negotiate a reasonable settlement, and make sure that all of your remaining debts are wiped off of your balance. Most attorneys and trustees will generally see if you are eligible for filing for bankruptcy under chapter 7 before they consider chapter 13, as this is the simplest and easiest option available. If you have questions, set up a time to meet with a personal bankruptcy attorney. Managing Repayment Plans Under Chapter 13 If your income is much higher than the mean income of the same size household in your city, then you may not be eligible for filing for bankruptcy under chapter 7, and may have to opt for chapter 13. Unlike chapter 7, you do not have to surrender all of your assets when you are approved for chapter 13. Instead, you are required to design a repayment plan with an attorney or a trustee that must be paid off within 3 to 5 years. In this situation, your attorney or trustee will need to speak with all of your creditors in order to negotiate a repayment plan.  This means that a repayment plan will be negotiated for your medical bills as well. Instead of paying the full amount, you may only be required to pay a portion of your medical bills. In addition, you may not need to pay any compounding interest during this time as well. To be eligible for chapter 13 bankruptcy, your unsecured bills must be less than $360,475; however, some exceptions can be made for large medical bills. Your attorney or trustee will need to make a case with the judge appointed to handle your bankruptcy filing.  Conclusion With medical care becoming more and...

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4 Things You Should Do Before Filing Bankruptcy

Posted by on Apr 9, 2015 in Uncategorized | 0 comments

Filing for bankruptcy requires careful planning. And believe it or not, decisions you make and actions you take right beforehand could impact your case. To ensure you give yourself the best possible chance for a good outcome, here are four things you must do before making a final decision. Take the Means Test Federal laws work to not only protect you but also to prevent those who make a lot of money from filing bankruptcy. One of the ways they accomplish this is by requiring most potential filers to take a means test, which compares your income to other families in your state. The US Census Bureau collects this information every year, and you can take a look at how your own income compares to others before taking the test. The test isn’t meant to shy you away from filing. It’s simply an important first step to take. Generally speaking, if your income falls below the median income for your state, you should be eligible to file Chapter 7. For those who end up filing Chapter 13, how you compare to the median income in your state will be a factor in determining your monthly repayments and how long you can expect your repayment plan to last.  Receive Credit Counseling Before filing for bankruptcy, you must go through credit counseling with a government-approved agency. And this typically needs to be completed within 180 days of the file date. Once you finish the session, you will receive a certificate of completion that must be filed within 15 days of the bankruptcy paperwork.  At your credit counseling session—which can be done online, over the phone, or in person—you and the counselor will go over your budget and discuss your debts as well as income. The counselor will then take a look at all the figures and determine if there is a way other than bankruptcy to get your debts paid off. If it’s determined that bankruptcy is the only option, they will let you know. The good news is if the agency comes up with an alternative to bankruptcy, you are not required to follow their recommendations. But it’s important to understand that, ultimately, the courts might look more favorably upon the agency’s recommendations and push you towards a Chapter 13 if it’s a better fit. Some credit counseling agencies are free, but others might have fees based on a sliding scale. Be sure to discuss this ahead of time so you know if you’ll be charged. Take a Look At Recent Financial Decisions There are certain financial “moves” that could affect the outcome of your case, especially if these things are done right before filing. For example, suppose you own a car, and you’re worried about losing it in the bankruptcy process. In an effort to prevent this, you transfer the title over to your eighteen-year-old son. This sort of behavior serves as a red flag to the courts, and they could deny your request for relief. Other things that should be avoided include moving large sums of money into someone else’s bank account, making extravagant purchases with a credit card, paying off one of your preferred creditors, or attempting to hide any of your assets. If you have done any of the above, it’s not the end of the road. You simply might have...

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2 Facts To Understand Before Filing For Chapter 7 Bankruptcy

Posted by on Mar 25, 2015 in Uncategorized | 0 comments

If you have a significant amount of credit card and overdue bill debt that you simply cannot pay off, then it may be in your best interest to file for Chapter 7 bankruptcy. Chapter 7 bankruptcy involves the liquidation or selling of property. Once property is sold off, the proceeds are divided up amongst the various debtors you owe money to. The bankruptcy process can be long, complicated, and confusing. This is why many people hire bankruptcy attorneys. You may want to do this as well, but you should first understand some important facts about the outcome of the bankruptcy. Certain Debts Cannot Be Discharged If you are in serious financial trouble to the point that you cannot pay off your debts, then bankruptcy may be able to set you on the right financial track once again. Unfortunately, many people believe that all debts are discharged through the bankruptcy process. This is not true, and there are several debts that will remain. You will still need to pay student loan payments, recent income tax bills, child support, alimony, and some types of legal settlements. Also, if you purchase expensive items three months before you file for bankruptcy, you may need to pay for these things. Your attorney can inform you of the debts you will owe after the bankruptcy goes through. It is extremely important to provide your lawyer with all past bills and known debts so the discharged and non-discharged debts can be calculated. All remaining debts should be added together and a preliminary payment plan should be worked out. This will help to determine whether or not you can pay your bills after the bankruptcy. If you cannot, then bankruptcy may not be the best option. Credit consolidation may be a better choice for you. Chapter 7 Bankruptcy Remains on Your Credit Report for 10 Years Most people know that credit reports are affected negatively by bankruptcy and this fact may stop you from filing. Chapter 13 bankruptcy will be listed on your credit report for seven years and Chapter 7 and 11 types of bankruptcies will be present for 10 years. The bankruptcy is erased from the report based on the date it is filed. All accounts on the credit report will say they have been included in the bankruptcy.   The bankruptcy reporting on your credit report may keep your from opening credit cards and finding a car loan with a decent interest rate. You may have difficulty applying for most types of credit, but your credit report will be clear eventually. Also, a bankruptcy will show future lenders that you have taken responsibility for your situation. You may then be seen as less of a risk than if you decided to default, miss payments, or if you have allowed property to be seized.   You Can Rebuild Credit  You can rebuild your credit as soon as the bankruptcy is finalized. This means you can continually raise your credit score within the 10 year bankruptcy period. This is not possible if you have lingering debts and defaults that need to be paid. A bankruptcy can reduce your credit score rating up to 240 points depending on your credit score at the time of the bankruptcy. Your score will then likely be somewhere in the 500 range. With a poor...

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When Can Chapter 13 Bankruptcy Cases Be Modified?

Posted by on Mar 24, 2015 in Uncategorized | 0 comments

When you enter into a Chapter 13 bankruptcy, you will be placed on a repayment plan. This plan will stay in place for a predetermined amount of time, and you will be required to make the payments specified in the original arrangement. While this plan normally doesn’t change, there are exceptions to the rule. If your circumstances change significantly, the trustee handling the case may decide to modify the plan, and here are three changes that could lead to this. Your Income Changes After filing for Chapter 13, a bankruptcy trustee will be assigned to you. This trustee is the person responsible for monitoring your case and is the only person that has the authority to modify your repayment plan. You are required to report all changes in income to the trustee when they occur, and you should realize that the trustee may change your payment amount based on these changes. Your payment amount could go up or down though, and this is determined by the type of change that took place with your income. For example, if you get a raise at work or receive a large bonus, the trustee might decide to increase your payment amount. If you receive more child support income or any other type of income, the trustee may also decide to increase your amount. On the other hand, your payment amount could drop if you lose your job or change to a job where you receive a lower income. You Acquire New Debt You may also request a payment change if you acquire new debt of some kind. For example, if you get sick and require hospital care, you may end up with a huge hospital bill. The trustee may allow you to add this debt to the Chapter 13 plan, but this may require paying a little more each month. Keep in mind that when your Chapter 13 repayment plan ends, all unsecured debts you owe (which includes hospital bills) are discharged. This means that these remaining balances are forgiven, and you will never have to repay them. You Give Up an Asset The other reason a trustee will modify a Chapter 13 case is if a person gives up an asset he or she owns. This typically only includes major assets, such as a house or car. When you initially set up your Chapter 13 plan, it will be based on the assets you own, your income, and the debts you have. With this information, the trustee creates a plan, but the plan can change if you give up a major asset you own. For example, if you decide that you do not want your house, you could contact the trustee to let him or her know that you are giving it up. This could be through a sale of the house, or you could let the bank take it from you. Because this changes your financial situation, the trustee may be willing to modify your plan. The new plan will allow for the rent that you must now pay for a house or apartment, and will account for the decrease in debts you have. Because of these things, the payment plan will decrease. If you find that you are really struggling with your repayment plan, you could file for a...

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The Tough Road Ahead: 4 Ways To Make Ends Meet When Applying For Disability

Posted by on Mar 17, 2015 in Uncategorized | 0 comments

When mental or physical health concerns prevent you from maintaining gainful employment, one of your first concerns is surviving the financial difficulties that occur without employment. There are options that may offer just enough assistance to help you and your family through the rough times. Research Financial Assistance Options If you were the main breadwinner in your home, or your partner does not make enough money to support your household, you may qualify for government assistance. Many people who are going through the disability application process wait until they have exhausted other options before applying for assistance. Applications for government assistance can take time to complete and determine if you meet the criteria to receive benefits. Even if you do not qualify for monetary assistance, you may qualify for food or energy assistance, which can go a long way toward keeping your family afloat during a stressful time. If you do not qualify for food assistance, or you only qualify for a small amount, do not overlook area food banks and churches as resources. Utilize Online Opportunities For Extra Income In general, applying for disability means that you are unable to maintain gainful employment, but this may not prevent you from earning small amounts of income for your household. Look for opportunities to earn gift cards by doing small tasks or surveys online, which can help offset some of your household expenses. If you have older children in your household who want to help the family, many of these companies allow teens to earn gift cards. Earning gift cards can become a family affair, and any cash that enters the household can be used for bills. Promptly Find Mortgage Or Rental Options If you currently have a mortgage, talk with your bank to determine if there are programs that will allow you to pay a lower mortgage until your disability determination. You may be eligible to refinance your mortgage or temporarily stop mortgage payments, especially if it is likely you will be approved for disability. If you currently rent an apartment or house, start searching for rental assistance programs that may subsidize your rent if you meet certain income guidelines. Unfortunately, many of these programs have long waiting lists and may only open their application process once every few years. Find The Right Lawyers Before you fill out the paperwork for disability, find a social security disability attorney to help guide you through the process. Look for lawyers who only charge you fees if you win your case. If you are approved for disability, fees are usually taken from retroactive payments you receive. A lawyer may not initially take your case unless you are in the appeals process, but they can be a source of helpful information from the start. Not having a lawyer during an appeal can make the process more difficult. Although you thoroughly fill out paperwork to explain your limitations and have medical documentation, you are limited in arguing your own case when appearing before a judge. Having a lawyer in your corner gives you a better opportunity to explain your situation, beyond what is written on paper. In addition to a lawyer for disability, you may need to consider a bankruptcy lawyer. If you have previous debts and unpaid medical bills, one of the first...

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