William H. Lively, Jr

Smith County Bankruptcy Blog

Medical bills a hardship to 137 million Americans

Overwhelming medical bills are causing people in Texas and nationwide to burn through their retirement savings and rack up massive debts, according to a new report by TD Ameritrade. In fact, the financial services firm found that 137 million Americans have faced financial hardship from medical expenses in the past 12 months.

The report found that medical debt is the number one reason Americans of all ages contemplate cashing in their retirement accounts. In addition, another recent study found that over 66% of all personal bankruptcy filings in the U.S. are linked to high medical bills. Many of these situations occur when people lose their jobs and have trouble keeping up their COBRA payments, causing them to also lose their health insurance. As a result, when a medical emergency strikes, they are on the hook for staggering amounts of money.

Filing for bankruptcy after turning 55

Many people living in Texas struggle with debt, and this includes those aged 55 and over. In fact, there has been an increase in older Americans filing for bankruptcy in recent years.

In many cases, medical bills are the driving issue behind bankruptcy. As people age, their medical needs can become more complex. Even individuals with insurance coverage may find themselves with tens of thousands of dollars in health care bills. In addition, health problems can make it difficult for people to work and may even force some into early retirement.

What are the 2 primary bankruptcy chapters for consumers?

Having financial difficulties is often emotionally draining. When you have more debt than you think you can reasonably handle, you should look into the possibility of filing for bankruptcy. This enables you to take legal action that will help you to get your money situation back on track.

You must consider the different types of bankruptcies that are possible for consumers. There are two primary chapters that individuals use – 7 and 13. These are two distinctly different options, so you have to find out which one meets your needs.

Creditors may face limitations as debts age

Debtors in Texas and throughout the country may dread the thought of being contacted by a creditor or debt collector. However, in some cases, a creditor or debt collector may be barred from taking any action to recoup an unpaid credit card or car loan balance. Generally speaking, if a debt is a decade old, an individual won't have to pay it back. Most states impose a statute of limitations on collection activities of either four or six years.

However, the statute of limitations may restart if an individual makes a payment on an old debt. It is also possible that a debt collector may only be barred from filing a lawsuit on a debt that is older than the statute of limitations in the state. This may mean that a debtor could receive letters or phone calls from agencies trying to get as much of a past due balance as possible.

Understanding when Chapter 7 bankruptcy may be a good option

When Texans are facing overwhelming debt, they are frequently unaware of what to do next. Many might be reluctant to consider personal bankruptcy. There are common misconceptions about the process. It is imperative to know that it can be a useful strategy to clear debt and start over.

Chapter 7 bankruptcy is a liquidation bankruptcy. There are key points to understand before deciding to file for Chapter 7. The assets and income are foundational parts of the process. If a person owes around $25,000 with an income leaving them in the middle class, it can be difficult to catch up and pay that debt. Bankruptcy could be beneficial for individuals who face these circumstances.

Student debt may be discharged in bankruptcy in some cases

Student loans are generally not dischargeable in bankruptcy, but there are circumstances under which a person may be able to have them discharged. For people in Texas who are struggling to make their student loan payments, the most common bankruptcy options are Chapter 7 bankruptcy and Chapter 13 bankruptcy. In order for student loans to be discharged, the bankruptcy petitioner must establish that repayment would constitute an undue hardship. The Department of Education has made efforts to create a concrete definition of the term, but undue hardship is still decided on a case-by-case basis.

Most bankruptcy courts apply the Brunner test in determining whether the petitioner has established an undue hardship. In order to pass the Brunner test, the petitioner must demonstrate three things. First, the petitioner must show that his or her income and expenses will not allow for a basic standard of living if student loans must be repaid.

Medical marijuana and Chapter 13 bankruptcy

Cannabis has been a difficult topic for companies seeking protection in Texas and across the country. As cannabis is legalized for recreational or medical use in a growing number of states and decriminalized in many more, the number of businesses associated with cannabis has grown. At the same time, some of these companies have failed and sought protection in bankruptcy courts. Overall, these companies have had a difficult time with many courts holding that the continuing federal criminalization of marijuana means that these companies can find no relief in the bankruptcy laws.

One Chapter 13 bankruptcy case involves the issue of medical marijuana but in a personal bankruptcy rather than in a corporate filing. Chapter 13 bankruptcy is an option that can help people to keep their assets while they pay off their debts in a court-approved payment plan. For people who make too much money to be eligible for Chapter 7 bankruptcy but still face crushing debt, Chapter 13 can be an important step toward debt relief. In order to construct the plan, the court will deduct monthly expenses to determine how much disposable income the debtor has.

3 ways bankruptcy can help you keep your house

Problems in one area of your financial life can quickly ripple out to influence other aspects of your life. For example, high levels of medical debt or credit card debt could quickly begin to exert pressure on your financial stability.

When you have to try to make the monthly minimum payment on an outstanding debt, you may struggle to pay all your utilities or your mortgage on time. Some people can even make the regrettable mistake of cashing out some of their home equity as a way to pay off otherwise unsecured debts.

Medical problems double the chance of bankruptcy

A research study from the American Bankruptcy Institute indicates that people in Texas and across the country have double the likelihood of filing for bankruptcy if they have had a gap in health insurance coverage of at least two years. The study included information from the Bureau of Labor Statistics for more than 12,000 people and found a strong link between consumer bankruptcy filings and health insurance coverage interruptions.

The statistical link was present even when researchers controlled for things like debt-to-income ratio and earnings overall. Health insurance coverage interruptions were often related to other factors that can cause bankruptcy, like divorce, health issues and lower annual incomes. It is common for people who have health insurance to get coverage via their jobs, so an interruption of employment might interrupt both income and health insurance coverage. Moreover, health problems can sometimes lead to instability in employment. Prior studies have shown that more than 66% of bankruptcy filings are linked to medical problems.

What to know about bankruptcy

Individuals in Texas may be able to erase some or all of their debts by filing for bankruptcy. The two most common forms of bankruptcy are Chapter 7 and Chapter 13. A Chapter 7 proceeding is often referred to as a liquidation bankruptcy. To qualify for this type of protection, an individual must pass a means test that seeks to determine if he or she has the ability to repay creditors.

A Chapter 13 case is generally referred to as a wage earner's plan. Debts are repaid over a period of three or five years, and any remaining unpaid balances are discharged at the end of the repayment period. Furthermore, debtors generally get to keep their property during this period. Anyone who files for bankruptcy may experience a variety of negative consequences. In some cases, debtors could see their credit scores fall up to 200 points after filing.

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William H. Lively, Jr

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William H. Lively, Jr
432 S Bonner
Tyler, TX 75702

Phone: 903-920-0008
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