Dubiln Packard

Medical Debt: I Need Help!

by

Medical Debt: I Need Help!

Medical debt can quickly become a nightmare, especially if you don’t have health insurance.  Sometimes filing for bankruptcy can help if your medical debt is so much that you can’t afford to pay it.

Two years ago, Tracy ended up in the emergency room of her local hospital after falling off a ladder when she was painting her kitchen.  She had broken two ribs.  She didn’t have health insurance, but figured the cost wouldn’t be astronomically high – she and her husband would figure out a way to pay it off.  Life happens, right?

She didn’t expect the bills to run over $25,000.00.  She filed for state-funded Medicaid, but was told her husband makes too much money for her to qualify.  She filed for the local hospital’s “Charity Care” program, but was told the same – she didn’t qualify because she and her husband make “too much money.”

Tracy’s husband manages a restaurant.  He makes just under $60,000 per year.  Tracy stays home with their baby daughter.  After their $1,300 per month mortgage payment, 2 car payments, car insurance costs, utility bills, and she and her husband’s maxed-out credit card bills, there’s barely enough money left at the end of the month to buy food.  Tracy couldn’t believe these people were telling her they make “too much money.”

Tracy consulted with a lawyer she knew to try and get the hospital to forgive the debt.  Her lawyer pleaded with the billing company, asking them to consider the fact that they just didn’t have enough money to even make small payments toward the $25,000 medical debt.  The hospital refused to make any accommodations.  Tracy refused to pay a dime toward the debt, because she felt they should understand her situation.  But the bills kept coming, and eventually she started getting calls and letters from collection agencies.  Because the debt had gone to collection, her personal credit score was now trashed.  She had been responsible her entire life, now because of some inflated medical costs she couldn’t afford, everything she had worked for was in question.

Tracy called a NJ bankruptcy lawyer and learned that if she filed for bankruptcy, she could get ALL of the medical debt and her credit card debt forgiven at the end of the bankruptcy program.  Her lawyer worked with her to come up with a plan, based on her household income, so that she can continue to make her car and mortgage payments on time, and still afford to buy food and pay her utilities.  She stopped paying her unsecured debt (medical and credit card debt), and at the end of the bankruptcy plan the $25,000.00  medical costs and her credit card bills were dismissed.

What had been a nightmare was finally resolved.  Tracy could get back to living a normal life.  Filing for bankruptcy isn’t a quick fix and isn’t supposed to be overused, but in Tracy’s case it was a valid solution to her problems.

by

What to expect from a bankruptcy lawyer

Here is what to expect from your bankruptcy lawyer in New Jersey.

It usually starts with a phone call –

Then a meeting.  At that first meeting, we will explain the process which starts with gathering a large amount of financial information from you.  We give you a questionnaire to take home which asks many important questions.  We will also give you a list of documents we need to complete your bankruptcy case.

Most people take advantage of our payment plans and start making regular payments.

While making payments, you will start submitting documents

Once we have all of your documents and other financial information, we start compiling your bankruptcy petition.

Once complete, we will ask you to review it and sign it.  Then we will submit to court.

In the case of Chapter 13, we will propose a Chapter 13 Plan to the trustee for repayment of your debts over tie.  The trustee will review it and usally make comments which cold require us to amend the plan.

Approx 30 days later, we will go with you to a meeting with the trustee known as the section 341 meeting.  There the trustee will ask you some questions and ask for your identification.  This meeting usually takes no more than 15 minutes and takes place at the Trustee’s office.

Ninety days after submission of your chapter 7 petition, you should be notoied of a discharge.

In the case of a Chapter 13, you will be required to make payments to the trustee right away.

Often at the 341 meeting the trustee will provide some comments that may require an amendement to your plan.  We will submit that amendment.

Confirmation hearing.  No need to attend.  Confirmation.

After confirmation, continue to pay the trustee every month for the duration of the plan.

by

About Car Loans

Financial stress can result in difficulty making car payments. There are several options for the car owner confronting financial difficulty, including loan extension or modification, sale of the vehicle, repossession of the vehicle, surrendering the vehicle, a “cramdown” of the car loan in Chapter 13 bankruptcy, or reaffirmation or redemption of the loan in Chapter 7 bankruptcy.

Auto loans are secured debt, with the car itself used as collateral for the loan. Lenders can repossess vehicles as loan collateral without a court order, soon after default on a loan. The loan is in default the next day after a missed payment, and the car can show up in the collection queue as soon as ten days after default.

Time is of the essence, for both lender and borrower. For the lender, it’s the rapid decline in the value of the car, and for the borrower, it’s the lender’s haste that forces timely action to avoid or address a possible default.

Failure to maintain insurance on a vehicle can also cause the loan to go into default, even if the payments are current.

If you’re going to be late on a payment, call the lender ahead of the due date and try to arrange an extension, change the payment date, or get the loan rewritten for lower payments over a longer term (resulting in more interest paid). If you’ve missed the deadline, try to catch up on payments as soon as possible. Hiding the vehicle or otherwise thwarting repossession will only add more to your liability when the car is repossessed, or a judgment is obtained. Buyers are responsible for collection, towing, storage and auction fees if a car is repossessed.

When a repossessed car is sold, the proceeds may not cover the outstanding loan balance and fees. In this case, a deficiency will exist for which the holder of the loan will be held responsible. (A deficiency is the difference between the outstanding loan balance and the proceeds collected by sale or liquidation of the asset.) This deficiency is unsecured debt, and can be discharged in a bankruptcy.

Another option is a “cramdown” of the loan in Chapter 13 bankruptcy. The loan balance can be marked down to the market value of the vehicle, and pooled with other debt in the debtor’s Chapter 13 repayment plan. The total paid may be less than the balance on the loan, and on completion of the payment plan under Chapter 13, the buyer will own the car free and clear.

In the event of a Chapter 7 bankruptcy, the option to reaffirm the loan exists, if the car payment is judged to be affordable by the court. In the event of a default after reaffirmation, the buyer is responsible for the debt, including a deficiency in the event of repossession and sale. If a vehicle is surrendered (that is, returned to the dealer) a deficiency will be wiped by the Chapter 7 filing.

722 Redemption

Another option in Chapter 7 for the car owner is a “722 Redemption,” in which the car loan is marked down to the market value of the vehicle and the dealer paid the reduced amount arbitrated by the bankruptcy court. The lien is released with no deficiency. It can be difficult for an owner to come up with a lump sum, but there are lenders who specialize in making loans in these circumstances. The loan is not discharged in the bankruptcy, and can enable the owner to keep the car.

Todd Murphy Law is experienced in dealing with issues related to auto loans in financial difficulty. Get help choosing your best course of action. Call Todd Murphy Law today for a free evaluation.

by

About Credit Card Debt

Most credit card debt is unsecured, with the exception of cards issued against a line of credit on a house or other asset. Millions of consumers are carrying more consumer debt than they can afford, making minimum payments or carrying balances at high interest rates. Even when this is not the case, a change in circumstances such as loss of employment or medical emergency can result in late payments, lowered credit scores, and a snowballing cycle of spiraling debt and default.

Consolidation of credit card debt onto a lower-interest card can be helpful. Many consumers have taken advantage of home equity credit lines or second mortgages to consolidate credit card debt, converting unsecured debt to secured debt – and increasing risk to their home in the process. If a borrower is in difficulty, adding unpaid credit to their mortgage balance may offer temporary relief and lower payments, but it’s likely that the unsecured debt will increase again, with the now-higher mortgage obligation decreasing available income to repay it.

In the event of financial calamity, unsecured debt should receive a lower priority for repayment than taxes, home, car or student loans. It may be possible to negotiate a lower interest rate with your lender, or if you’ve gone into default, credit card companies will offer settlement on a reduced balance. The difference between the settlement and the balance may be declared as a payment to you by the credit card company via a 1099, giving you a potential tax liability.

Credit card debt settlement companies charge huge fees to negotiate settlements with credit card companies, often without successfully settling the debts. If you’d like to try to settle a debt, direct negotiation with your lender is often the best option. If your circumstances are serious enough, consult with a qualified attorney to find out if a bankruptcy filing is your best option. If this is the case, your attorney will advise you to stop paying all unsecured debt and have it managed in the bankruptcy proceeding. Your debt may be wiped completely in a Chapter 7 bankruptcy filing, or partially repaid in a Chapter 13 plan that allows you to restructure your finances.

 

by

About Personal Loans

Personal loans are unsecured debt. Often given by family members or friends, the borrower may feel a particular obligation to the lender and wish to make a particular effort to repay the loan.

In cases of financial difficulty – and a bankruptcy filing – the court insists on equal treatment of creditors. If a personal loan is paid back just prior to a Chapter 7 bankruptcy filing, the court may attempt to recover the repaid funds from the family member or friend, claiming them for the pool from which all creditors are repaid in bankruptcy. A borrower taking such an action may subject himself to higher payments in his Chapter 13 payment plan and otherwise less favorable treatment from the court.

If you’ve taken a personal loan, don’t repay it if you anticipate you might need to do a bankruptcy filing, unless you’re making equal payments to your other creditors.

The court requires that all debts, including personal debts, be disclosed. This is for the protection of the borrower as well as all of his creditors. In a bankruptcy, the court’s responsibility is to distribute liquidated assets evenly among the creditors without special favor. If a personal debt is not declared in a bankruptcy, the borrower may sue to recover afterwards, claiming it was not covered in the bankruptcy settlement, and may obtain a judgment for the full amount.

The borrower may wish to repay personal loans that have been discharged in bankruptcy. He has the option to do so after bankruptcy is completed.