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“I want to file medical bankruptcy.” I get that phone call a lot. The situation is that many people are current on their house, car and credit card payments, but they were hit by a wave of medical bills and just want to file bankruptcy on those debts. Can a person just file bankruptcy on medical debts? Is there such a thing as medical bankruptcy?
Technically, there is no such thing in the law as medical bankruptcy, and there is no way to file bankruptcy by only listing medical debts. When you file bankruptcy all debts are listed. In fact, when somebody files bankruptcy they sign a sworn statement that says, under penalties of perjury, that they have listed ALL their debts.
When someone says they filed medical bankruptcy what they mean is that they filed not because of irresponsible spending but because of something beyond their ability to control–their health. You hear the term medical bankruptcy a lot for good reason.
NerdWallet estimates for 2013:
- 56M Americans under age 65 will have trouble paying medical bills
– Over 35M American adults (ages 19-64) will be contacted by collections agencies for unpaid medical bills
– Nearly 17M American adults (ages 19-64) will receive a lower credit rating on account of their high medical bills
– Over 15M American adults (ages 19-64) will use up all their savings to pay medical bills
– Over 11M American adults (ages 19-64) will take on credit card debt to pay off their hospital bills
– Nearly 10M American adults (ages 19-64) will be unable to pay for basic necessities like rent, food, and heat due to their medical bills - Over 16M children live in households struggling with medical bills
- Despite having year-round insurance coverage, 10M insured Americans ages 19-64 will face bills they are unable to pay
- 1.7M Americans live in households that will declare bankruptcy due to their inability to pay their medical bills
– Three states will account for over one-quarter of those living in medical-related bankruptcy: California (248,002), Illinois (113,524), and Florida (99,780) - To save costs, over 25M adults (ages 19-64) will not take their prescription drugs as indicated, including skipping doses, taking less medicine than prescribed or delaying a refill
“Medical Bankruptcy” is really Chapter 7 or Chapter 13 Bankruptcy.
When someone says they filed medical bankruptcy they really mean to say they filed Chapter 7 or Chapter 13 bankruptcy. All debts must be listed, even the ones you want to keep, such as auto and mortgage debts. However, this is not really a big problem you can sign Reaffirmation Agreement in Chapter 7 cases to keep and revive the debts you want to keep. A Reaffirmation Agreement basically pulls a debt out of the bankruptcy case so that you can keep the car, home, etc, and continue the benefit of getting positive credit reporting.
Ongoing Medical Bills: The benefit of Chapter 13 cases.
I meet many clients who suffer from ongoing medical problems. Even if they file Chapter 7 today to wipe out the medical bills, in six months they are right back where the started with new medical debts. They may lack health insurance or the insurance they have contains loopholes that don’t cover certain medical treatments. Such individuals may benefit from the extended protection of Chapter 13. Chapter 13 cases can be open from 3 to 5 years and may eventually be converted to Chapter 7 to add new medical bills that accrued during the bankruptcy. While a person is in Chapter 13 creditors may not garnish paychecks or bank accounts. In some ways, Chapter 13 is something of a drastic form of health insurance.
Image courtesy of Flickr and Scott Kless.
A recent client asked this great question:
Is there such a thing as getting help to avoid bankruptcy? My wife and I have a small business. We are struggling to keep it going. We’re down over 50% this year, we’ve cut some expenses, and customer payments are dragging. While we are not unique, and I am sure you have heard it before, but we would like to avoid drowning. Please let us know if you would be available/interested in a consult.
The short answer is YES! We help people avoid bankruptcy every day. Filing bankruptcy is something you do when nothing else works. It is the last option. The process of deciding to file bankruptcy is really a process of elimination–when no other option solves the entire debt problem you then focus on bankruptcy. Partial solutions are no help. Settling one debt or one lawsuit is nice, but if it does not solve the whole problem it is just throwing money away. The benefit of bankruptcy is that it is a complete solution.
So how do we help clients avoid bankruptcy?
DEBT PAYMENT PLANS.
How much does it cost per month to get out of debt? You must answer that question before you consider bankruptcy. This is a two-step process:
STEP ONE: List the debts. Making a list of your debts is about as much fun as getting on a scale after going out for dinner. There comes a time when you stop opening the mail and lose track of how much you owe. It’s depressing so you avoid it. If you really want to avoid bankruptcy you need to write down a list of who you. Follow these steps to prepare a list.
- Open the mail. Stop throwing away collection letters. Go through the pile of envelopes pushed to the corner. Sort the debts, put them in separate files, use color-coded three ring binders, etc. Do whatever it takes, but organize what you have.
- Get a credit report. Go to www.AnnualCreditReport.com for a free copy of your credit report.
- Search for lawsuits and judgments online in Nebraska. Here is an article to help search the public records online.
- Some debts do not appear on credit reports. Just write the Name and Address of your creditors and estimate the amount you owe each.
- Call creditors to figure out the balance owed.
- Locate student loans using the National Student Loan Data System.
- Write the interest rate charged by each creditor next to the balance owed.
- Divide the list into Secured creditors (mortgage auto, furniture loans) and Unsecured creditors (everybody else).
STEP TWO:
- Add up the list. How much do you owe in total?
- Divide the total by 36. Can you afford that payment? For example, if you owe $18,000 of debt, can you afford to pay $500 per month? This is a rough estimate of what you need to pay each month to become debt free. Call it the “Rule of 36″.
- Consider a debt management company such as GreenPath to set up a debt payment plan. I prefer counselors belonging to the National Foundation for Credit Counseling.
DEBT SETTLEMENT.
Most of the people in debt settlement programs should not be in them. Most of the debt settlement plans I review have virtually no chance of succeeding. Why? You need money on hand to settle debts. If you cannot raise enough settlement funds quickly enough the creditors will file lawsuits and begin garnishments before you can settle all the debts. As a general rule, you need about one-third of what you owe in cash within 6 months of stopping payments to creditors to have any chance of settling all the debts. Creditors will typically settle debts for about 40% of what is owed, but they want the settlement in cash now. If you are able to raise cash quickly debt settlement might be an option. We help clients settle credit cards and other debts every day, but only if we see a reasonable chance of all accounts being settled.
LAWSUIT DEFENSE.
Can the creditor prove you owe the debt? Has the Statute of of Limitations expired? Can the creditor provide a copy of the credit card agreement? Are you being sued for a medical debt that your health insurance should have covered? Over 90% of creditor lawsuits result in Default Judgments. We can show you how to respond to lawsuits and to demand an accurate accounting of the debt.
BUSINESS REORGANIZATION.
Sometimes a small business is so overcome by debt that it must reorganize. Some small business corporations are so saturated with debt that it must start over. It is possible to form a new corporation and start with a clean slate. There are special rules to follow to prevent the old corporation from contaminating the new company, but this is a valid strategy to reorganize without filing bankruptcy. Personal guarantees of business debts must be considered as well.
The bottom line is, there are many ways out of debt. You need to consult with an attorney that carefully goes through each option. That is what we do. We can help you avoid filing bankruptcy if you visit with us before the situation gets out of hand.
Image courtesy of Flickr and David J. Dalley.
Is your home being sold at a Walworth County tax sale? If so, you may want to know what rights you do and don’t have in regards to your real estate property. Below we’ve answered some of the most common questions regarding the tax sale process.
Frequent Questions from Home Owners Regarding a Walworth County Tax Sale
What is a tax sale? A home is sold during a Walworth County tax sale when delinquent taxes are due and owing for a period of three years. If you don’t pay your taxes for three years, then your home can be sold to the public for the amount of the delinquent taxes due, plus any other involved fees.
Who is notified that my home is being sold at a Walworth County tax sale? The person responsible for making the tax payments is notified. This person is usually, you, the homeowner. The tax sale is also announced to the public. You can usually find a list of properties being sold on the county website.
How can I prevent my property from being sold at a Walworth County tax sale? There are three ways to prevent your home from being sold. 1. Pay your back taxes or enter into a payment plan with the County. 2. If you are on military leave, you must notify the tax treasurer of your active military status. 3. File for bankruptcy. Learn more about your bankruptcy options by scheduling a free, initial consultation with our Walworth County real estate lawyer.
What if I own multiple lots? Can I designate a particular parcel to be sold in order to satisfy the delinquent taxes due and owing? Yes, you can. Notify the Walworth County tax treasurer to do so.
If my home was sold at a Walworth County tax sale, how can I get it back? You must pay the tax sale purchase price, plus penalties and interest, to the county treasurer. The treasurer will then pay the tax purchaser. Visit the office of the county treasurer right away.
Can my family or friends redeem my property for me? Of course, they can. Anyone can pay the total amount due and owing in order to redeem your property. They will not own your property if paying on your behalf. The redemption will be in the name of the tax debtor.
Contact our Walworth County Real Estate Lawyer
If you have other questions regarding the sale of your home during a Walworth County tax sale, please feel free to contact our Walworth County real estate lawyer. You can reach Wynn at Law, LLC by phone at 262-725-0175 or by eMail via our website’s contact page. Schedule an appointment with our Walworth County real estate lawyer at any of our convenient office locations: Lake Geneva, Delavan, Salem, and Muskego, Wisconsin.
*The content and material on this web page is for informational purposes only and does not constitute legal advice.
Chapter 13 bankruptcy is complicated. They are difficult cases from the standpoint of debtors, creditors, bankruptcy attorneys and at times the bench. For this reason, things don’t always proceed smoothly the first time through the process. Like anything else, there is a learning curve to doing things. For debtors, the learning curve can be drastic.+ Read More+ Read More
The post When Your First Chapter 13 Bankruptcy Case Fails, Don’t Give Up appeared first on David M. Siegel.
If you have never heard the term “debt buyer,” you might be amazed to learn that large companies exist solely for the purpose of buying and selling consumer debt. These companies buy and sell billions of dollars of debt. Some are part of public companies that trade shares of stock on stock exchanges.In other words, credit card companies, hospitals, personal loan companies, banks and other lenders regularly sell and resell debt – and this may include debt owed by you.Here’s how it works. Let’s say that you open a Mastercard or Visa account with a local bank. Over the years you may start running a balance – perhaps $2,000 or $3,000. You are able to make the minimum monthly payment but the balance grows slowly. At some point, you find yourself with a problem – you miss one or two monthly payments and your account becomes two or three months past due. The credit card company cancels your account and starts sending you collection letters.At that point, the credit card company may decide that it would rather sell your delinquent debt for cash before it gets too much older. Depending on how delinquent the debt is, a debt buyer may pay only 4 or 5 cents on the dollar. Your 2 month delinquent debt of $3,000 will be packaged along with other similar debt and sold in bulk to a debt buyer at this discounted rate.The debt buyer may attempt to collect the debt by dunning you (calling repeatedly) or the buyer may retain a lawyer and sue you.Debt buying is a perfectly legitimate business as long as the debt buyer follows the rules. Debt buyers also know that most consumers do not know the rules so the debt buyers often take advantage of a consumer’s ignorance of the law and inattention to what is going on.Some of the illegal tactics used by debt buyers include:
- repeated collection calls that violate the Fair Debt Collection Practices Act ban on harrassment and after hours calls
- misleading consumer into consenting to autodialed calls
- failure to respond to consumer disputes of debt
- farming debt to law firms for litigation without appropriate documentation
- threatening consumers with lawsuits for debts where the statute of limitations has run
- collecting on debt where the debt buyer has no documentation
Debt buyers know that most consumers will not respond to collection lawsuits. High volume collection law firms may file hundreds or even thousands of lawsuits each month, often with little or no lawyer oversight, yet the collection firms win most of these lawsuits by default when the consumer/defendant fails to answer.The Consumer Financial Protection Bureau is starting to go after debt buyers who pursue shady practices. Recently, for example, the CFPB imposed a $79 million penalty against to large debt buyers – Encore Capital Group and Portfolio Recovery Associates.According to the Collections and Credit Risk web site:
The CFPB found that Encore and Portfolio Recovery Associates attempted to collect debts that they knew, or should have known, were inaccurate or could not legally be enforced based on contractual disclaimers, past practices of debt sellers or consumer disputes. The companies also filed lawsuits against consumers without having the intent to prove many of the debts, winning the vast majority of the lawsuits by default when consumers failed to defend themselves. The alleged practices violated the Fair Debt Collection Practices Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Even more recently a federal judge in the Northern District of Georgia declared Georgia’s post judgment garnishment statute unconstitutional because it failed to include various consumer protection safeguards having to do with funds that are not subject to seizure. Whether this judge’s ruling holds up on appeal remains to be seen.While I applaud the CFPB’s actions, you should not assume that the debt buying and collection lawyer industries will suddenly change their ways. The profit in buying and selling debt is so great that some debt buyers may look at CFPB’s fines as a cost of doing business.
- If you are receiving collection phone calls, you do not have to put up with harassment even if you owe the creditor money.
- If a sheriff’s deputy knocks at your door and hands you paperwork do not put that paperwork in a drawer and hope that the problem will go away.
- Most importantly, do not assume that the only reason to call a bankruptcy lawyer is to file a bankruptcy. If you live in the Atlanta metro area, I invite you to call my office at 770-393-4985 to talk with Susan Blum or myself about any debt issue you may be facing. Sometimes the Bankruptcy Code may offer a solution but many times, a strongly worded letter, advice about how to respond to a collection lawsuit or even an explanation about the collection letter you have received will help you decide how to proceed.
Collection agents rely on your ignorance of the law and your fear of challenging their apparent authority to intimidate you into acting for their benefit. You do not have to play their game anymore.More about the debt collection business: click hereThe post Don’t Fall Prey to Illegal and Immoral Behavior by Debt Buyers appeared first on theBKBlog.
Upcoming Webinar Series: Collect Your Money in Bankruptcy
Attorneys Scott Chernich and Patricia Scott will be presenting a FREE webinar series this fall titled “Collect Your Money in Bankruptcy.” This three-part series will cover what to do as a creditor if you receive a bankruptcy notice in a Chapter 7, Chapter 11 or Chapter 13 bankruptcy. Read More ›
Tags: Chapter 11, Chapter 13, Chapter 7
Private Student Loans are the single worst debt in existence. They lack any formal Income Based Repayment (“IBR”) plans and the debts are generally not discharged in bankruptcy without undergoing expensive litigation and claiming a special hardship. In recent years, the National Collegiate Student Loan Trust, the largest holder of private student loans, has filed thousands of lawsuits against delinquent borrowers, and I count several hundred such lawsuits filed in Nebraska.
National Collegiate lawsuits are really no different than a basic credit card case, and they suffer many of the same problems:
Trusts Lack Capacity to Sue in Nebraska.
As a general rule, a trust is not a legal entity and lacks the ability to sue or be sued. Rather, the lawsuit should be brought in the name of the Trustee. (See Black Acres Pure Trust v. Fahnlander, 233 Neb. 28 (1989)). The Uniform Law Commission has written extensively on this issue and has proposed a uniform law to create “statutory trusts” that would enjoy the same rights given to corporations to sue or be sued.
A common-law trust arises from a private action without the involvement of a public official. Because a common-law trust is not a juridical entity, it must sue, be sued, and transact in the name of the trustee and in the trustee’s capacity as such. By contrast, a statutory trust is a juridical entity, separate from its trustees and beneficial owners. It has the capacity to sue, be sued and transact on its own.” Uniform Law Commission.
So, is National Collegiate a “common-law” trust or a “statutory” trust? Does that distinction make a difference in Nebraska? National Collegiate is organized as a Delaware trust agreement and that state does provide for statutory trusts empowered to sue. There are arguments to be made both ways, but until the courts rule on this issue, the first defense to these lawsuits is to file a motion to dismiss.
National Collegiate Must Show They Own the Loan.
You did not borrow money from National Collegiate. Most likely the loan originated from JPMorgan Chase or Bank of American or Charter West Bank. The loan was then assigned several times and eventually wound up in one of the several trust pools managed by National Collegiate. It is essential that National Collegiate be required to provide the “chain of assignment” showing how your loan was specifically assigned from the original lender to the National Collegiate Trust. Failure to prove the entire chain of assignment means the lawsuit must be dismissed for lack of standing.
Statute of Limitations.
In Nebraska, lawsuits filed for breach of a written promissory note must be filed within five (5) years of the date of last payment or from an acknowledgement of the debt. It is important to demand an account payment history from National Collegiate to verify the date of last payment. Very often the records of National Collegiate are sketchy at best and they seem to struggle to provide detailed account statements. If they do assert a payment was made in the preceding 5 years, research your bank statements to see if their record of payment matches your records.
Did a Prior Bankruptcy Case Discharge Some of the Student Loan?
Have you filed bankruptcy before? If so you may have discharged some of the National Collegiate obligation already. Although Federal Student Loans are not discharged in bankruptcy (unless you receive a Hardship Discharge), when it comes to Private Student Loans only the amount qualified under Section 221(d)(1) of the Internal Revenue Code is excepted from discharge. I have seen cases where loans were made for $30,000 per year when the actual cost of attending the college, including tuition, books, room and board and transportation expenses, was only $10,000 per year. Also, only loans to a qualified educational institution are protected. National Collegiate often sues for debts that have been partially or entirely discharged.
Statute of Limitations are not Tolled During a Chapter 13 Case in Nebraska.
If you can go five years without making a payment or requesting a loan deferment, the Nebraska statute of limitations may apply. (See National Bank of Commerce v Ham, 256 Neb. 679 (1999))., The 5 year limit must run prior to the commencement of the lawsuit and you must affirmative claim this defense in the written answer filed with the court. If you sense that you are about to be sued by National Collegiate, consider filing Chapter 13 to run out the SOL clock.
Negotiate the Debt.
National Collegiate is willing to cut a deal. Even if they are successful in obtaining a judgment, they still have the burden of collecting the debt. The fact that they have initiated a lawsuit means that they probably have not received any payment in years. I have represented clients who were able to settle $150,000 of loans for $30,000. Each case is unique, but National Collegiate is willing to consider reasonable settlement offers.
Image courtesy of Flickr and Occupy* Posters.
While it is typically true that there are generally three options available to debtors in a chapter 7 bankruptcy with regard to their autos, there may in fact be a fourth option. In a chapter 7 bankruptcy case the debtor has the ability to reaffirm, redeem or surrender and auto. A fourth option which seems+ Read More
The post A Fourth Option To Deal With Your Car In Bankruptcy appeared first on David M. Siegel.
Choosing a college just got a little easier, thanks to a revamped government tool that provides information on what former students of each school might earn, how much debt they leave with, and what percentage can repay their federal student loans.
The revamped government website, the College Scorecard, was unveiled by the Obama administration on September 12, 2015 and lets prospective students and families easily find information about colleges and universities.
“Everyone should be able to find clear, reliable, open data on college affordability and value,” President Barack Obama said in his weekly radio address. “Many existing college rankings reward schools for spending more money and rejecting more students — at a time when America needs our colleges to focus on affordability and supporting all students who enroll.”
The site reveals a host of student outcomes at specific institutions, including:
- graduation rates;
- median salary information; and
- student loan repayment rates, including the share of a college’s former students who are paying down their federal loans within the first three years after leaving college.
The information is a step up from the old version of the site, which tracked former students in default on their federal loans. Those numbers hid the millions of borrowers who were in forbearance or otherwise not making their payments.
Now, students weighing their college options can see whether students at a particular school earn more than they would have had they entered the job market right after high school, graduation rates and typical student debt and monthly payments a student would owe for each school.
“Students deserve to know their investment of resources and hard work in college is going to pay off,” said Education Secretary Arne Duncan.
The Obama administration originally wanted the site to provide a college ratings system that would judge schools on affordability and return on investment. That plan was scuttled in the face of criticism from those in higher education as well as Congressional members who saw it as arbitrary, unfair, and a case of government overreach.
Click here to be taken to the College Scorecard.
Additional reporting:
Obama promotes online search tool with college-specific data to aid families in school choice
The New College Scorecard
Obama Administration to Unveil New College Comparison Search Tool
The post New Student Loan Tool Reveals Earnings and Repayment Data appeared first on Bankruptcy and Student Loan Lawyers - 866.787.8078.
I was fortunate enough to be invited for a short interview on a local radio station. This is just an audio program, but it is only 12 minutes long. I hope the information is informative.
Radio Interview with Attorney and Law Professor - Diane L. Drain
The post Radio Interview with Attorney and Law Professor – Diane L. Drain appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.