A Common Misconception

It is a common misconception that an individual is unable to file for relief under Bankruptcy Code if their debt is incurred due to medical expenses.  This can be especially concerning these days, with the costs of even the most basic medical care at astronomical levels. Fortunately, this is also false. Medical bills CAN be discharged through either a Chapter 7 or Chapter 13 bankruptcy and should definitely be included when an individual is weighing the benefits of deciding to file.  This, however, is only true for medical expenses incurred before the date of filing. Any debt incurred after the date of filing is not subject to discharge through the bankruptcy and therefore can be subject to debt collection.  

For more information on what debts can and cannot be discharged in bankruptcy, please contact your local bankruptcy attorney.

Stop Creditor Calls

When bills pile up and it seems impossible to get ahead, the situation is often made worse by the relentless phone calls of creditors.  Many people can feel trapped or harassed by bill collectors, who threaten legal action and more.  These calls and mailings can quickly become overwhelming and it can feel like there is no relief.  But there is.  By filing for Chapter 7 or Chapter 13 Bankruptcy, a person can find relief from these constant contacts from creditors.  If a bankruptcy is deemed appropriate, an individual should be able to expect creditors to stop contacting shortly after the court has sent out notifications.   Any further contact should be directed to the individual’s BankruptcyAttorney, who will then deal with the matter pursuant to Bankruptcy Law.

For more information on how to find financial relief through bankruptcy, please contact your local bankruptcy attorney.

Smart Money: Your Tax Return Could be a Ticket to Financial Freedom

This tax season, the average American taxpayer is receiving a $3,000 return. What

will you spend your tax return on this spring? Studies have shown that 43% of

Americans put their tax return into savings, 36% put the money towards paying off

their debt, 10% put money towards vacation, 6% purchase a luxury item, and 5%

make a necessary purchase, such as a house or car. While all are worthy ways to

spend money, paying off your debt could be the best investment you can make

with your tax return if you are in debt. Carrying around high-interest debt, with

interest compounding against you every month can be especially stressful. Surveys

tell us that debt is the most common cause of financial stress in the United States.

Your tax return could be a ticket to financial freedom.

If you have excessive amounts of debt that you are struggling to pay off, you could

spend your tax return most efficiently by putting the money towards filing for

bankruptcy. Bankruptcy offers the opportunity for you to get caught up on mortgages

or car loans without the threat of repossession or foreclosure and sometimes you can

be relieved from the legal obligation to pay some debts. To better understand if this

is something worthy of investing your tax return in, set up a consultation with your

local bankruptcy attorney to learn more.

After Bankruptcy: What is Next?

Bankruptcy gives you a fresh start in your financial life. But once you’ve received
your discharge from your bankruptcy, you may not know exactly what steps to do
moving forward.

1. Collect and file all your bankruptcy paperwork

Be sure to keep a copy of your bankruptcy petition, the 40-50 page document that
details your financial information. Also keep your notice of bankruptcy filing  as
well as a copy of your discharge order that you received from the court.

Why should you do this? Sometimes when lenders are considering you for new
credit, they want to see your bankruptcy papers. It is also important to keep these
documents in case anyone wants to collect on your old debt in the future.

2. Start a budget and review it frequently

Many bankruptcies begin as a result of unforeseen medical expenses, job losses,
or sudden family changes such as divorces or birth of children. Creating a budget
allows you to prepare and set goals for the future. There are many great budgeting
tools you can access through apps on your phone.

3. Start an emergency fund

As part of starting a budget, you will want to designate some funds for
unforeseeable emergency financial events. This fund could even turn into
retirement savings or college tuition savings in the future.

Why should you do this? This fund will prevent you from creating new debt
when emergencies arise. This fund will also make you feel less anxious about
your finances and prevent panic when emergencies happen.

4. Think about ways to improve your credit

Fresh out of your bankruptcy, you will have little to no debt. This is a great
opportunity to build your credit. However, be careful not to let yourself get carried
away. Begin with a small credit limit, monitor your charges, and pay more than just
the minimum amount every month. Another opportunity for building credit is by
investing in a secured-CD.

5. Explore financial management resources in the area

Because bankruptcy allows a fresh start on your financial life, it never hurts to learn
more tips and tricks to navigating personal finance in the future. You can check out
free seminars offered by local non-profits or community colleges.

Discharging Student Loans

If you are looking to discharge your student loans, it is a complex process, but not
impossible. After 1990, student loans are no longer considered “dischargeable.”
This means that in order to seek relief, an adversary proceeding is required--a
lawsuit must be filed separate from the bankruptcy case. You must prove that the
payment on your student loans causes an undue hardship. Most courts use the
Brunner test to measure the burden of the debt. It is a three-pronged evaluation that
requires the following: 1) the individual and their dependents cannot maintain a
minimal standard of living if they were required to pay the student loan, 2) there must
be additional factors that guarantee this poor standard of living will continue
throughout the whole payment period, and 3) the individual has made good faith
effort to pay the loans. If you can demonstrate that you meet these conditions, your
student loan could be cancelled as a whole.

There are advantages and disadvantages to discharging student loans. To better
understand if filing for an adversary proceeding is for you, it is recommended that
you set up a consultation with your local bankruptcy attorney.