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
Over the past couple of years, lenders that finance automobile loans have been accepting borrowers with lower credit scores — including some with no established credit. When this happened in the housing market, it was called “subprime” lending and resulted in a collapse of the economy. In a recent report, Fitch Ratings said the 60-day delinquency rate on securitized subprime auto loans was at the highest level since 1996. Exeter Finance, which purchased a $300 million bundle of loans last October, found the average borrower credit score was 573, and 6.6 percent of the loans purchased were made to borrowers who had no credit score at all. According to Fitch, in February 5.16 percent of securitized auto loans were at least 60 days past due. “There is a lot of competition in the industry, which is why many lenders have lowered their underwriting standards,” said Kevin J. Bambury, attorney, Jeffrey Freedman Attorneys, PLLC. “This is not a good sign for the economy. We have to remember, however, that automotive lending doesn’t have anywhere near the ripple effect of mortgage lending.” At the height of the subprime mortgage lending curve in 2006, lenders took on $600 billion worth of risky mortgages.… Continue Reading Automotive lenders treading on thin ice with subprime loans
As if surviving cancer isn’t enough of a challenge, one-third of cancer survivors end up in debt and 3 percent find themselves seeking the protection of bankruptcy, according to a new study by the Kaiser Permanente Center for Health Research, Portland, Oregon. The 2012 survey included data from 4,719 cancer survivors aged 18 to 64 years. In more than half of the cases, debt levels were more than $10,000. In the United States, the average cost of new cancer therapies is now somewhere between $10,000 and $60,000 per month — an increase of two to three times more than other healthcare expense increases over recent years. Youth, income level and type of insurance affect the financial vulnerability of cancer patients, with lower income people affected most. In a previous study, bankruptcy rates were found to be twice as high for those who had survived cancer than the general population. “Even with good health insurance, co-pays and deductibles create a huge financial burden,” said Kevin Bambury, attorney, Jeffrey Freedman Attorneys at Law, PLLC. “The greatest cost is usually drugs, but other treatments such as surgery, hospitalizations, radiation treatments and tests can also have great impact on the family budget.” Cancer patients… Continue Reading Cancer survivors also face financial challenges
If you are in fear of having your home foreclosed,there may be ways to protect it. Typically, debtors whose homes have gone into foreclosure have missed payments because they or a close family member has suffered an illness or serious personal injury. They have not been able to work, and therefore have had little to no income for a long period of time. It is not always easy to put the mortgage payment ahead of spending money for food or medicine. When you are behind on your mortgage, the amount you owe the bank to bring the loan up-to-date is called the “mortgage arrears.” In a Chapter 13 bankruptcy, we can spread these arrears over a three- to five-year plan and pay your unsecured creditors (credit cards, medical bills, etc.) a percentage of what you actually owe, which should allow you to designate some of your income to catch up on your mortgage. Payments made to the Chapter 13 Trustee will be dispersed to the mortgage company and the unsecured creditors who file claims. For a Chapter 13 plan to be successful, the future mortgage and tax payments need to be kept current. It is important to speak with an… Continue Reading Thinking of bankruptcy? You can protect your home