Although debt consolidation is an alternative to declaring bankruptcy, it does not address many of the core problems that lead to the accumulation of debt in the first place, like overspending. Many times, people who consolidate their debt end up right back where they started. Often, people in debt don’t realize their expenses are greater than their income. Debt consolidation can be a viable solution if debtors stop using their credit cards, save for emergencies, and create and stick to a budget. However, if it would take more than five years to pay off the debt without debt consolidation, it’s best to consult an attorney to discuss bankruptcy options.
Because marijuana is still under the Controlled Substances Act, federal courts have generally refused to allow marijuana businesses to file bankruptcy, even in states where the sale of cannabis is legal. Without bankruptcy protections, marijuana entrepreneurs may be denied access to debt restructuring, which could expose them to personal liability to creditors of their business. These businesses must treat their debt portfolio with great caution or consider getting out of the business altogether until federal laws change.
F. Lee Bailey, who defended O.J. Simpson as well as Sam Sheppard, the physician who inspired the movie The Fugitive, has declared bankruptcy again in Maine. Mr. Bailey filed for Chapter 13, which will allow him to discharge certain debts that he could not discharge in the Chapter 7 bankruptcy he filed for last year. His debts stem from a dispute over how he handled a drug smuggling and money-laundering case in 1994. Mr. Bailey has since been disbarred in Florida and Massachusetts. His attempt to be admitted to the Maine bar was denied.
Procedural rules applicable to bankruptcy proceedings were recently authorized by the United States Supreme Court. The new rules are set to take effect on December 1, 2017. Among the changes is a standardized Chapter 13 plan that would include a paragraph requiring the debtor to highlight provisions that limit a secured creditor’s claim to the value of its collateral, provisions that seek to avoid a lien on the debtor’s real or personal property, or non-standard plan provisions. The new rules also require the debtor to provide creditors with 21 days’ notice of the deadline for objecting to a Chapter 13 plan. Creditors must file their proofs of claim within 70 days after the bankruptcy petition filing date.
Current bankruptcy laws in American dictate that student loan debt cannot be discharged in bankruptcy, unless the applicant can show “undue hardship,” which is a financial burden so extreme that other options would not provide relief from the loans. The average student graduating in 2016 carries a debt of over $37,000. This amount can be as many as two to three times more for those who complete graduate studies. Even without any other debt, student loan debt can prompt a financial tailspin for individuals, especially when repayment on student loans begins mere months after graduation. The United States Congress has received several proposals aimed at reducing the student loan debt burden, one of which allows an individual to include his or her student loans in bankruptcy if and only if the lender does not offer any debt-relief options. Organizations opposed to debt relief include those that purchased bundled student loans as investments called SLABS, or Student Loan Backed Securities. If the debt can be discharged in bankruptcy, the value of the SLABS decreases.
With rising health care costs a continuing reality, many Americans are turning to crowdfunding platforms to help pay for their medical care. Even life-saving, commonplace medications like insulin for diabetics have tripled in cost since 2002. The Canadian Medical Association Journal reports that on GoFundMe alone, health-related campaigns occupy the largest percentage of crowdfunding on the site. In the United States, the National Center for Health Statistics stated that in 2014, “personal health care expenditures in the US totaled $2.6 trillion,” which is a 5% increase from the year before. For the total US population, the per capita personal healthcare expenditure in 2014 was $8,054. Most of the crowdfunding campaigns were more likely to originate in states that rejected Medicaid expansion under the Affordable Care Act. As of 2013, medical bills are the biggest cause for personal bankruptcy filings.
Most working people look forward to their 60s, 70s and beyond as their “Golden Years.” They plan for retirement and are ready to settle back and enjoy life. Unfortunately, for too many of them, the dream never materializes. If one or the other partner in a relationship becomes seriously ill, medical expenses can make it tough going financially. “We recently saw an older gentleman whose wife had just passed away a month ago. The co-pays and costs of her medications during her final months had put him $40,000 into debt on credit cards,” said Courtney L. Quinn, attorney, Jeffrey Freedman Attorneys, PLLC. “As we age we tend to need more health care and more medications. Medicare and the supplemental insurance programs available to those over 60 often don’t cover the actual costs.” No one wants to declare bankruptcy, least of all older people who have worked their entire lives and managed their money carefully. However, no one should have to struggle under the burden of medical debt, enduring the harassment of debt collectors and possible threat of foreclosure on their homes. Under a Chapter 7 bankruptcy, debts related to medical care can be discharged so anyone who has gone through… Continue Reading ‘Golden Years’ can turn to lead after a medical crisis
In today’s world, even people who manage their money carefully can end up in serious financial distress. Some of the most common causes are medical debt, sudden unemployment and divorce. These life-changing events can put an individual or family in a situation where they cannot pay their bills. “Being in debt can be extremely stressful and when you find yourself in a situation through no fault of your own, it becomes overwhelming,” said Christopher J. Grover, attorney, Jeffrey Freedman Attorneys, PLLC. “It is best to recognize the problem as soon as possible, and seek out information to come to a favorable conclusion.” Filing for bankruptcy protection is often a viable solution, however, the general public has a lot of misconceptions about bankruptcy. “It’s not something that we take lightly, but Chapter 7 bankruptcy can give an individual the fresh start they desperately need,” Grover said. One of the biggest myths is that the individual has to give up everything they own in a bankruptcy. Certain assets, however, are exempt from turnover in a bankruptcy — particularly equity in a home. “In a Chapter 7 bankruptcy, a trustee is appointed to review the value of your assets, sell any assets that… Continue Reading Explaining away the myths about bankruptcy
It’s commonly thought that taxes owed to the IRS are not dischargeable in bankruptcy. F. Lee Bailey (former attorney for OJ Simpson) and his attorneys, however, filed a case that proved this assumption wrong. The 83-year-old Bailey had a dispute with the IRS over the total amount of his income from 1993 to 2001 that resulted in an unpaid tax bill of $5 million. This year, he filed for bankruptcy in the state of Maine to have the debt discharged. “At 83, it’s a little late to raise that kind of money overnight. It’s been a long battle,” he told the Press Herald in Portland, Maine. “Quite often income tax debt can be, and is, discharged through the filing of a bankruptcy case,” said Kevin Bambury, attorney, Jeffrey Freedman Attorneys, PLLC. “There are a number of qualifications that must be met for the tax debt to be discharged, but in most cases the client can meet the criteria.” Usually, the income tax due has to be three years or older and the taxpayer must have properly filed returns each year. In Bailey’s case he had filed and paid his taxes on time for the years after 2001 – the years for… Continue Reading You don’t have to be F. Lee Bailey to get taxes owed to the IRS discharged in bankruptcy
Families in financial stress due to the bills resulting from an illness or injury often think of themselves as facing “medical bankruptcy.” Under the law there is no such term, however, for those who are over their heads in debt because they are not able to pay medical bills, this is a very real situation. “Even families with good health insurance can be devastated financially by a serious disease due to co-pays for treatment and medications, and other uncovered medical expenses,” said Jeffrey Freedman, Managing Partner, Jeffrey Freedman Attorneys, PLLC. Medical facilities can be very aggressive about collecting debts — convincing patients and families to put the debt on credit cards, go through special lenders such as Care Credit, or take out home equity loans. Also, a number of medical services have to be paid in advance which means the expense often ends up on a credit card or line of credit. By the time the debtor reaches bankruptcy court, the debts are not readily identified as related to the illness. “When a loved one’s life is at stake, people borrow against their credit cards, their homes and from their families — the focus is on the illness, not the… Continue Reading Medical Bankruptcy is not a legal term — but it is a very real and devastating situation