Top 5 Things to Ask a Bankruptcy Attorney

 

 

 

 

 

 

 

 

 

 

 

 

 

Most bankruptcy attorneys will answer these key questions during your initial consultation. However, it is important not to rely on your attorney to get the essential information you need. So, without further ado, here are my top 5 things you should ask a bankruptcy attorney during your initial (and hopefully free) consultation.

1. Do I have some non-bankruptcy alternatives?

Most people who are in a financial crisis may not realize that they have other alternatives besides filing a bankruptcy case. In fact, there are several alternatives! A good attorney should always advise you of both your bankruptcy and non-bankruptcy options. In fact, there may be important reasons why one should NOT file a bankruptcy case (such as the threat of losing an asset), so you might not even have a choice. Consulting with an attorney is the only way you can make an informed decision.

2. What chapters of bankruptcy do I qualify for?

There are several types of bankruptcy cases and there are laws which dictate which type of case you qualify for. The most common case is a Chapter 7 case, but most people also qualify for a Chapter 13 case. There are important reasons why one might choose one over the other. Make sure you understand the distinctions between these two cases because, although your attorney can advise you, you will be the one who must choose which chapter to file.

3. How much will filing a case cost me and what do those fees cover?

Most bankruptcy attorneys understand that you are in a financial crisis… otherwise why would you consider filing a bankruptcy case, right? However, legal representation can be costly. Paying for an attorney can be a huge factor in your decision making process so it’s important to understand what those fees cover before you shell out the cash. The bankruptcy process can be daunting and if not done correctly can cost you more than just those attorney’s fees. Therefore, although fees can be costly, sometime they are a necessary and required cost.

4. How long will a bankruptcy case take?

Not all cases take the same amount of time from beginning to end. The amount of time from an initial consultation, preparing the paperwork, filing the case to receiving your discharge varies case by case. Make sure you understand how long the case will take so that you can prepare for your future. Bankruptcy can be a slow and sometimes quiet process so be sure to check in with your attorney if you have any questions along the way.

5. Do you feel that there are any complications which might arise in my bankruptcy case?

Make sure you don’t get blindsided! Although sometimes complications arise in a case which are unforeseen, there are clear red flags that your attorney should be aware of. Make sure that you are aware of what those complications might be so that you can prepare yourself in case they do show up.

Reasons to Hire an Attorney When Filing for Bankruptcy

The US Bankruptcy Court, Central District of California (Santa Barbara County) released a new website earlier this year. Among the changes, the Court added a great “Don’t Have an Attorney?” resource page. Below are the top 14 reasons why a debtor should consider hiring an attorney in a bankruptcy case.

Reason why you should hire an attorney when contemplating bankruptcy

Natalie A. Spilborghs, Esq.

If you are considering filing for bankruptcy, you may have problems and should consult an attorney if any of the following apply to you:

  • You have tax debts, student loans, or liens on your property.
  • You own property with equity.
  • You own your own business.
  • You are involved in a profit-sharing arrangement.
  • You have an asset you do not wish to lose.
  • You have a pension plan.
  • You want to avoid having your financial accounts frozen.
  • You want to avoid having your wages garnished.
  • You have ever used another name or social security number.
  • You have previously filed for bankruptcy.
  • You want to avoid an eviction or foreclosure.
  • You are registered as a California domestic partner.
  • You have questions about what debts will be discharged.
  • You are filing a Chapter 13 bankruptcy.

Be smart about your legal rights and financial future! Consult with an attorney to evaluate your case and be better prepared.

The Law Office of Natalie A. Spilborghs offers a FREE initial consultation to determine whether bankruptcy is right for you!

US Bankruptcy Court of Santa Barbara County's Free Legal Clinic

Santa Barbara Bankruptcy Court

Santa Barbara County Bankruptcy Court

 

Free Legal Clinic to be held on Monday, November 25th, 2013.

Who Doesn’t Love FREE Legal Advice?

Join me November 25th, 2013 at the United States Bankruptcy Court of Santa Barbara County at 1415 State Street, Santa Barbara, CA 93101 for a FREE legal clinic. Myself and another local attorney will be donating our time from 10:00 a.m. to 12:00 p.m. TODAY to answer any questions you might have about the bankruptcy process or to let you know whether you might need to hire an attorney. This is a great resource! Don’t let it go to waste! Come visit us today!

Santa Barbara Foreclosures vs Short Sales... Which One Hurts Your Credit More?

Santa Barbara Foreclosure

Santa Barbara Foreclosure

Santa Barbara Foreclosures versus Short Sales: Which One Hurts Your Credit More?

Let’s be honest, whether you suffer through a foreclosure or a short-sale, your credit will take a hit… we all know that. The real question is, which one is worse? In Santa Barbara county, the number of foreclosures is declining versus the number of bank-approved short sales. With the recent trend in approved short sales, it is important for a home-owner in Santa Barbara county to understand the differences these two will have on your credit score.

How Foreclosures and Short Sales are Reported to the Credit Bureaus in Santa Barbara County

A foreclosure on a credit report will simply be listed as a “foreclosure” and can have a nasty lasting effect. On the contrary, a short sale can be listed on a credit report a number of ways; either as a “charge off,” “deed-in-lieu of foreclosure,” “settled for less than the full amount due” or “foreclosure”, all of which can have the same negative impact on your credit score. The difference in the way these debts are categorized has little impact on your credit score as compared to the amount which is listed.

When a foreclosure is listed on a credit report, the credit reporting agency will list the entire balance owing as the unpaid loan amount. As compared to a short sale, which will list the balance owing as the difference between the loan amount and the sale amount of the property, as of the date of the short sale. Therefore, it is more likely that the negative impact on your credit score will follow whichever reported balance is greater.

But Wait… There’s More!

Seemingly short sale sellers would get the better end of the deal versus those whose properties have undergone a foreclosure. However, the initial impact on a credit report will tend to disperse over time as more recent reported information begins to have more of an impact on your credit score. This means that the more positive credit activity, the more a consumer’s credit score will increase and at a greater pace. Therefore, a consumer who has undergone a foreclosure can, potentially, end up with a greater credit score than someone with a short sale.

So What’s the Bottom Line for Santa Barbara Consumers?

The bottom line is that a consumer going through either a foreclosure or a short sale can potentially be prevented from qualifying for a new mortgage for up to seven years by Fannie Mae and other mortgage lenders. Therefore, a consumer should make the decision to undergo either a foreclosure or a short sale only after he/she has completely determine both the short and long-term effects in both credit and other personal factors.

So You Filed Bankruptcy... You're Not the Only One

Bankruptcy Shame

One of the major myths about filing for bankruptcy is that you are the only one that you know who has filed. In fact, everyone that we know has, at one point or another, fallen into hard times. Parents, neighbors, friends, local community members and colleagues… it doesn’t take a lot of time to think about one of these people who has struggled.

Bankruptcy doesn’t just happen to the “normal” people, there are a number of famous people who have also filed for bankruptcy:

  • Mick Fleetwood
  • Wayne Newton
  • Walt Disney
  • Henry Ford
  • Burt Reynolds
  • Larry King

And a list goes on…

So Why the Negative Emotions?

Filing for bankruptcy comes with a feeling of failure and loss. There is a sense that you cannot support your family, yourself and therefore you have failed somehow. Although I can completely understand the negative emotions that accompany this time in a person’s life, I’m here to tell you that bankruptcy is merely a tool and a moment in time.

Bankruptcy is a way to start a new life and begin again. We are fortunate to have a legal process that allows us a second chance. How many times in life have you wished that you could have done something over or had a second chance? That is what bankruptcy does. It is simply a road from a unfortunate financial past to a bright financial future. It’s a “do-over” that allows us to learn from our mistakes and better protect your family and future.

What Kind of People are Filing?

Part of the negative emotions come from the “type” of person everyone assumes is filing for bankruptcy. In the number of years that I have been practicing, I cannot say that I encountered someone that has abused the system. The typical debtor is not the person who runs up their credit cards and then discharges their debts. In fact, the law is created so that those people cannot discharge their debts.

The typical debtor is the husband that lost his job, or the wife who is going through a divorce, or the student that just graduated and cannot find a decent job. In other words, the typical debtor is the typical citizen. Your neighbor, friend or loved one. It is the person who has fallen on hard times, lost their job or a small business owner that is adjusting to an ever-evolving economy.

Although it may not ease the pain of having to go through this process, it may come as some relief that the average, hard-working American has taken advantage of the bankruptcy process.

How to Ease the Pain

Most people are quiet about filing for bankruptcy. You may never know how many people within your inner circle have filed for bankruptcy. The most important thing is to feel at ease with the process. Be sure to choose an attorney that makes you feel comfortable and with whom you can be honest with. Bankruptcy is not fun and most people discuss their situation with a heavy heart. That is why you want to speak to family members, friends and anyone else you trust. Seek the counsel of those in your inner circle, talk to them throughout the process and, when the case is in your rear view mirror, enjoy the fresh start and rise to the top.

Impact of the Government Shutdown in Santa Barbara County

Santa Barbara Mortgage Help

Santa Barbara, CA

Santa Barbara and the Government Shutdown

As we are currently entering into Day 3 there has been a lot of talk about the government shutdown and how it affects our everyday life. This is the first time the government has shutdown since 1995 and as Republicans and Democrats cannot agree on a spending plan for the next fiscal year, average Americans are feeling the pain from their delay.

In Santa Barbara, the initial impact of the government shutdown is felt locally as federal jobs are furloughed and National Parks are closed, including Santa Barbara County’s Los Padres National Park. An estimated 900 non-military employees at Vanderberg Air Force Base are on furlough and must wait until they receive a call informing them that they may return to their jobs.

The University of California Santa Barbara has not felt any impact yet, but UC Santa Barbara spokesperson George Foulsham said that “the shutdown could affect federally funded research if it continues”.*

Although it seems as if the government shutdown presents a relatively minor impact on Santa Barbara County, there is more than what meets the eye.

What About those Santa Barbara Locals Who Lost Their Jobs

The main issues the Santa Barbara Vandenberg AFB employees are confronted with is income. Employees were allowed to work only four hours the day of the shutdown and were forced to go home. Currently they are “on furlough” which is a temporary unpaid leave. How temporary? No one really knows.

Since the main impact is felt in the pocketbooks, this means that these employees must make the most of the income that is currently sitting in their bank accounts. Due to the unpredictable nature of the government shutdown, these Santa Barbara locals cannot determine how much they need to save in order to make their money stretch to the end of the month. Groceries have to stretch from one week to two weeks and gasoline has to last.

But what if the shutdown lasts longer than we hope? As the furloughed employees go longer without returning to work, the income that they have saved will eventually go exclusively to necessaries. This means food, clothing, gas, utilities and other ordinary living expenses. Things that their money will not go to… mortgages!

How the Shutdown is Affecting Home Sales in Santa Barbara County

Mortgage rates in Santa Barbara County have been steadily on the decline since the beginning of 2013. Coupled with the decrease in home values at the end of 2012, this downward trend in interests rates has brought some much needed relief to Santa Barbara locals who have been waiting to purchase a home. According to data from Freddie Mac, 30-year fixed mortgage rates fell to 4.22 percent for the week of Oct. 3, down from 4.32 percent on Sept. 26.

Normally, homeowners would leap at the chance to grab the lower interest rates, but the frenzy that surrounds the government shutdown has created uncertainty in the housing market. This means that Santa Barbara County might see another downward trend in home purchases in recent months to come.

So How Does This Affect Mortgages in Santa Barbara?

The Federal Housing Administration

Federal Housing Administration loans will be affected by this government shutdown. If you are a Santa Barbara local who is waiting for a FHA loan, you may be out of luck as the FHA is one of the arms of the government which is closed during the period of the shutdown. Even more, if you are currently in the beginning stages of applying for an FHA loan, your loan will also be delayed as the FHA will not assign case numbers until the shutdown is over.

The Internal Revenue Service

What is the main thing that lenders look at when deciding on a loan? Income! Another impact the government shutdown has on Santa Barbara locals trying to get a home loan is how lenders will verify income. It will be more difficult for lenders to verify income via their tax return. By law, mortgage lenders must verify income by looking at one-year’s worth of federal tax returns which must be verified by the IRS office. As federal agents in the IRS are also furloughed, this delays the verification process.

The Bottom Line

The bottom line is that Santa Barbara is impacted by the government shutdown, although not nearly as much as other cities in the United States. While home loans may be low right now, those that can take advantage of the low prices should!

For those employees that are furloughed, I implore our community to rally around those individuals during this time. Invite them to dinner or bring them a cup of coffee. The best part of Santa Barbara is our community and closeness. Now is a good time to show someone you care!

Santa Barbara Mortgages

Santa Barbara Mortgages and Bankruptcy

Santa Barbara Mortgages and Bankruptcy

 

 

 

 

 

 

 

 

 

 

 

Santa Barbara Mortgages and Occupancy Fraud

I recently read a report of about mortgage fraud and was shocked to find out that Santa Barbara mortgages were listed as some of the riskiest for lenders. Since I found the research interesting and thought I would discuss how mortgage relates to bankruptcy law. Interthinx, a national provider for risk mitigation, released it’s quarterly Mortgage Fraud Risk Report. According to this most recent report, occupancy fraud risk has increased by 15% nationwide within the last year.

Occupancy fraud occurs when the borrower states on a loan application that he will occupy the property as the primary residence or as a second home but, in fact, intends on using the home as a rental property. This can typically lead to lower interest rates since lenders typically charger a higher interest rate for non-owner occupied properties.

What’s interesting about this report is that Santa Barbara made it’s mark. The report found California to be the riskiest state and that our great state contains five of the top ten riskiest cities which included, right, you guessed it, Santa Barbara.

I found it unusual that Santa Barbara would have made the list for occupancy fraud. In no way do I think of Santa Barbara as a town were people buy up real estate and turn the properties into rentals, but then I remember that Santa Barbara is also home to UC Santa Barbara and Santa Barbara City College. So it’s not entirely inconceivable that borrowers are making false reports in order to obtain a better loan rate and thus turn the property into a rental.

How This Relates to Bankruptcy

There are certain debts which are nondischargeable (not erased) in a bankruptcy case. Most people have heard rumors about taxes, student loans and child support. The big one that most people don’t realize is debts that involve fraud. Certain occupancy fraud may be considered to be fraud with relation to a nondischargeable debt.

What happens in a bankruptcy case with relation to a mortgage is that the Deed of Trust which is placed on the property remains. However, the Promissory Note is typically discharged through a Chapter 7 case and the debtors are no longer personally liable for the mortgage. Therefore the question remains… what happens is a borrower lied on their financial statements in order to obtain a better loan rate? Well, if the lender can prove to the Court that the property was intended to be an owner-occupied property and was in fact a rental unit, then the Promissory Note will not be discharged and the debtors will owe that amount post-bankruptcy.

How To Obtain a Mortgage Post-Bankruptcy

If you have declared bankruptcy in the past, undoubtedly you are concerned about how that decision might affect your ability to obtain a mortgage in the future. What most people don’t realize is that home ownership post-bankruptcy is entirely a possibility.

Certainly the fact that you filed a bankruptcy case will be of concern to the lender when looking at financing a new home. Therefore, it is important to demonstrate to the lender that you are financially responsible. There are certainly things you can do to improve your attractiveness to a potential lender.

Rebuilding Your Credit

This is easy, pay your bills on time, maintain a low balance and keep some cards with zero balances. Run a credit report to ensure that all of the information contain in it is correct. If you find mistakes, then write letters to the three credit reporting bureaus (Experian, TransUnion and Equifax). Lastly, hold off on purchasing big items, unless it is a vehicle with a vehicle loan. These can be beneficial to show that you can pay your bills on time.
Rebuilding your credit takes time. Therefore, you will want to wait a few years before applying for a mortgage. This will show the lenders that you are responsible at maintaining good credit for a longer period.

Build Up Some Savings

Your best chance at securing a mortgage is to ensure that you have enough money to make a strong down payment and cover closing costs. Having this type of money in your savings account will make you more attractive to lenders.

When To File Bankruptcy: Four Factors to Consider Before Filing

When to file bankruptcy

When to file bankruptcy

When to File Bankruptcy: The Telegraph, a British newspaper, posted an article online today about a man name Paul Potts who was on the brink of filing for bankruptcy and turned his life around to become a multi-millionaire. Like most people, Mr. Potts was making very little money and using his credit cards to supplement for the gap in his income. Things changed for him when he entered into Britain’s Got Talent and one the first prize of £100,000. Although his rags to riches story is out of the ordinary, there are clear signs for most people of when to file for bankruptcy. This article got me thinking about when to file bankruptcy and some factors to consider before doing so. This is one of the most common questions that is asked of attorneys. As with any legal issue, it is extremely important to consult an attorney and to be candid about these factors in order to determine when to file bankruptcy.

When To File Bankruptcy Common Question 1: Can I Do Credit Counseling?

Credit counseling is a wonderful way to avoid filing a bankruptcy case. There are a few pros and cons to consider before committing to a credit counseling plan. First thing to know is that there are two types of credit counseling agencies: “for-profits” and “non-profits”.

The for-profit agencies collection money from you on a monthly basis. They build up a “war chest” and, once they have enough, begin to call your creditors and settle your debts for pennies on the dollar as well as take a monthly amount for their “services.” The problem is that this is something you can do yourself and save the monthly amount that the agency would collect.

The non-profit agencies call your creditors and negotiate reduced minimum monthly payments that may be easier for you to maintain. The question I would ask is “When does it end?” Although these monthly payments may be more manageable, it may take years to pay off the debts. However, some of the plans that these agencies set up might work for some debtors. It is important to go speak to a non-profit credit counseling agencies, at least to see what type of plan you can get into.

In fact, if you do decide to file for bankruptcy protection, to must receive a certificate of completion of a pre-bankruptcy course from an approved non-profit credit counseling agency.

When To File Bankruptcy Common Question 2: Do I Qualify For a Bankruptcy Case?

In order to file a bankruptcy case, you must first determine whether you qualify for a bankruptcy case. There is a bankruptcy Means Test calculation to determines whether you make too much money to file for a bankruptcy case. There is a preliminary test that the United States Department of Justice released to determine whether your income falls above or below median income for your household family size. If you are under median income, then you automatically qualify for a Chapter 7 case. If you are over median income, then you must complete the means test in order to determine whether you qualify.

This test can be rather complicated and therefore it is important to see an attorney to fill out the means test (and preliminary median income test). The timing of when to file a bankruptcy case is determine by the filing party. Therefore, if a debtor does not initially pass the means test, an attorney can assist you in determining whether waiting might make the means test easier to pass.

When To File Bankruptcy Common Question 3: What If I Have a Pending Foreclosure?

There can be several benefits to filing a bankruptcy case before a foreclosure sale has taken place. Filing a case before the sale can buy a family some additional time in their personal residence and thus allow for time to pack, find a new place to live and move. Additionally, there can be some tax ramifications that can be alleviated if a bankruptcy case is filed before a foreclosure sale. It is important to speak to both an attorney and a CPA in order to determine whether your case might make you liable for additional tax debts.

When To File Bankruptcy Common Question 4: Is There A “Better” Time to File?

There are “better” times to file a bankruptcy case. There are a number of situations to consider when determining when to file bankruptcy. First and foremost, there are emotional and moral issues that an individual or family must consider when filing a bankruptcy case. I constantly tell my potential clients to go home and speak to whomever is in their circle of trusted family and friends and have a discussion about whether to file a bankruptcy case or not.

Secondly, lawsuits are a good indicator that it might be time to file a bankruptcy case. When a civil lawsuit is initiated by a creditor and a judgment is received in the case, the creditor can garnish wages, levy on bank accounts and place liens on property. Most of these can be avoided if a bankruptcy case is filed prior to the creditor receiving the judgment.

Lastly, the timing of when to file bankruptcy can be dependent upon the financial activity of a debtor immediately prior to filing a case. It may be obvious to most people, but a debtor cannot fraudulently transfer assets in order to save them from being sold in a bankruptcy case. What may not be so obvious are the sales of and transfers of property and are, seemingly, done innocently. Certain activity may prevent a debtor from receiving a discharge in bankruptcy.

Therefore, it is extremely important to speak to and be completely candid with an attorney. The better scenario is to speak to an attorney prior to selling or transferring assets so that he or she can determine whether the activity would be construed as a fraudulent transfer.

Santa Barbara Bankruptcy: How Bankruptcy Affects an Individual

Santa Barbara Bankruptcy: A recent article in the Santa Barbara Independent did a wonderful job discussing how bankruptcy affects you as an individual. Reading that article inspired me to write a post about the topic.

There are many myths surrounding bankruptcy. However, filing a Santa Barbara bankruptcy case does in fact have several factual consequences that should be considered. Some of these consequences are long term and some can be overcome in a shorter time period. Like every legal process it is important to consult an attorney to determine whether there are any legal consequences to consider.

Santa Barbara Bankruptcy: How Does it Affect Your Credit Report

Once you file a Santa Barbara bankruptcy case, your credit report will take a hit and it will push your score to the bottom of scale. This can be a great concern for many people. A Chapter 13 Santa Barbara bankruptcy case will remain on your credit report for 7 years from the date of discharge. With a Chapter 7 Santa Barbara bankruptcy case, the filing will remain on your report for 10 years.

However, it IS possible to repair credit. There are plenty of tricks and strategic moves that will repair credit. Getting a secured credit card is one way to build credit. A secured credit card requires you to put down a deposit. You can then use the card like you normally would. If you cannot pay, the banks will use the deposit to pay the remaining balance. Paying your debts on time is another way to rebuild credit. You can also get a vehicle loan, the loan will probably be at a higher percentage rate, but maintaining the monthly payments on time will boost your score.

A Santa Barbara bankruptcy case is not the end of the world for your credit. It CAN be repaired, but it may take a number of years.

Santa Barbara Bankruptcy: Obtaining Credit After Filing

Creditors will typically extend credit to those who have filed a Santa Barbara bankruptcy case shortly after the debtor has received their discharge. Credit cards are the easiest to receive. A debtor will also be able to receive a vehicle loan, although the loan terms are longer and interest rates are usually higher than for someone who has not filed a case before.

Santa Barbara Bankruptcy: Should I File Before I Get Married?

Usually, it is recommended that someone file a Santa Barbara bankruptcy case prior to getting married. This will help to ensure that the debts of the future spouse are not transferred to the marital estate. Filing a Santa Barbara bankruptcy case prior to marriage helps with a fresh start to a new life together.

Santa Barbara Bankruptcy: The Emotional Fallout

Filing a Santa Barbara bankruptcy case will have some fallout emotionally. People do not take the decision to file a Santa Barbara bankruptcy case lightly. It is a tough decision emotionally for anyone who files, whether it be a business or consumer case. With filing comes feeling ashamed and the feelings of failure. However, the benefits are enormous. At the close of a Santa Barbara bankruptcy case comes a fresh start. The creditor calls stop and one can focus on the things that really matter like family and friends. A weight is lifted and you can sleep at night.

With that being said, when contemplating filing a Santa Barbara bankruptcy case it is important to find an attorney who is compassionate and understand your situation. The last thing that you want is an attorney with bad bed-side manner! Don’t feel bad about attorney-shopping. There are several wonderful Santa Barbara bankruptcy attorneys therefore be sure to find one that makes you feel at ease with the whole process.

How Can Bankruptcy Help With Medical Bills?

Medical bills and bankruptcy

Medical bills can put a strain on the wallet, often forcing people into bankruptcy.

Medical bills are a huge driving force pushing patients into filing bankruptcy cases. A recent article on NBC News.com found those who are diagnosed with cancer are more likely to file a bankruptcy case than those patients with other illnesses. This may be because, out of the most common medical concerns, cancer reigns highest on the list of treatment costs.

Let’s Look at Some Research

The Hutchinson Institute for Cancer Outcomes Research located in Seattle looked at register of patients both cancer and cancer-free and matched these names against a list of those who had filed bankruptcy. What they found was, overall, cancer patients were 2.5 more likely to file for bankruptcy. The study also found that bankruptcy rates were 10 times higher among younger patients than older patients. Most likely because the older patients are most likely covered by Medicare and Social Security benefits.

Medical bills are one of the top reasons why debtors file a Chapter 7 bankruptcy case. Although the economy may push people into financial straights, this often results in physical and mental aliments. Thus, although the primary force for filing bankruptcy may be the loss of a job or other economic losses, medical bills tend to be the main thrust to filing a case.

Wait, What About Health Insurance?

Most hoped the introduction of Obamacare would help alleviate the mounting debt of medical bills and thus reduce the need for bankruptcy filings. Sure, Omabacare will help those who cannot afford health insurance. However, for those who are simply underinsured (those who can afford health insurance but cannot afford the cost of care) the medical bills will only continue to grow.

Think about it this way, the whole point of health insurance is to make health care more affordable than without it. We continue to pay into our monthly premiums with the hope that when those medical bills come in the mail the cost to us will be reduced. The problem is that most of us cannot afford to pay a high premium. Therefore, when those medical bills come in the mail, the portion paid by the insurance company is small and the remaining balance which we pay is still high!

This isn’t even getting into the bigger picture, what happens when a major illness occurs? Most of us can get by the usual day-in and day-out of paying our regular medical bills such as regular visits, the occasional cold and minor aches and pains. When you are diagnosed with something major, like cancer, the medical bills can amount into the tens of thousands! Not only are you then flooded with a mound of huge medical bills, but now you are also faced with the simple fact that you cannot bring in income as you normally would. This isn’t even mentioning that you then begin to rely on credit cards and lines of credit to supplement that loss of income.

This is Depressing… So How Can Bankruptcy Help With These Medical Bills?

Bankruptcy is a great option for dealing with the mounting medical bills. Medical bills are one of the most common dischargeable debts in a Chapter 7 case. Medical bills are treated the same as credit cards in a Chapter 7 case. In other words, they are discharged (wiped out). This helps a patient to focus on their recovery and plan for their future. Bankruptcy can be a complicated process. Therefore, it is always recommended that you consult with an attorney when contemplating filing any type of bankruptcy case.