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Lexington Bankruptcy Blog

Chapter 7 bankrutpcy and medical debt

For 12 years now, personal bankruptcies in the United States have been on the decline. For those Kentucky residents who have been able to struggle through and overcome financial crisis, this is great news. However for those who are still in the midst of the financial battle, filing for Chapter 7 bankruptcy may be in their best interest.

For many, the struggle to pay everyday bills such as the mortgage, car note and consumer loans can be a burden. Then, when a family member becomes ill and requires ongoing medical treatment, the bills quickly multiply and can easily get out of control. In fact, many times, an illness that requires ongoing medical treatment can lead to loss of income due to the inability of the individual to continue working at the same level as before the illness, if at all.

Chapter 7: Moving past reservations and pursuing debt relief

Many individuals in Kentucky and across the country have experienced the financial strain of dealing with the burdens of debt. Should these hardships persist, a person might consider seeking relief from debt through Chapter 7 bankruptcy, but he or she may be hesitant to make such a major decision. However, seeking advice on the potential outcome of a bankruptcy could help one overcome any reservations and pursue a healthier financial future.

There may be numerous benefits to filing for Chapter 7 bankruptcy, some of which could have an immediate impact on one's life. With constant collection calls and letters coming in, and the potential threat of wage garnishment, the automatic stay could alleviate a great deal of stress. This part of bankruptcy could provide protection against creditors throughout bankruptcy proceedings.

Chapter 7 bankruptcy can happen to anyone

Some people just seem to have it all. On the surface, it appears that these Kentucky residents have a good job, a beautiful home and money in the bank. However, the reality of the situation for many is that the picture presented to friends and family is far from the truth. Once one begins to move forward financially, the temptation to live beyond one's means is great. The simple fact is that many who find it in their best interest to file for Chapter 7 bankruptcy are those that appear to have it all.

Former Kentucky Wildcat and NBA star Antoine Walker discovered this to be true. In 1996, Walker was drafted by the NBA and began making the money that most only dream about. Over a twelve-year time period, he accumulated contract dollars in excess of $100 million. At this point in his life, it would appear that he had it all.

Are investment accounts protected in Chapter 13 bankruptcy?

Even when faced with a financial crisis, many Kentucky residents have the foresight to look ahead. The goal is to solve the current problem without creating a long-term one that can possibly affect one's ability to retire and enjoy life. For some, how Chapter 13 bankruptcy can affect their investments is a concern.

Employer sponsored 401K plans are often a valuable source of retirement income. They are also the place where a good portion of the average individual's investment portfolio is housed. Fortunately, these investment accounts are protected in most cases. For example, creditors typically cannot look to these accounts for payment. The one primary exception to this is amounts due to the IRS.

Medical debt grace periods begin in September

There are many paths to consumer bankruptcy -- living beyond one's means, out-of-control spending patterns and fiscal mismanagement -- that are rooted in poor saving and spending habits. As such, with time and effort, couples and individuals can eventually get their finances back on track.

However, the primary reason adults file consumer bankruptcies today in America is because of unmanageable medical debt.

Chapter 7 may be a better solution than payday loans

The overwhelming feeling of being out of money before all the bills are paid is something many in Kentucky can appreciate. While the option of filing for Chapter 7 bankruptcy may provide some with relief from their debts, some may first try alternative methods of debt relief. Unfortunately, far from providing a solution, some of these methods compound the situation.

One woman describes falling short on the money she needed to pay her rent. She decided to borrow $200 from a payday loan store, writing a check for $215 for the loan and a fee. However, when the deadline for repayment arrived two weeks later, the woman was no closer to having solved her financial situation, so she borrowed more from the payday lender. More interest and fees were added, and before she knew it, the woman had paid over $1,400 in interest to the payday loan store.

Debt doesn't just go away; Chapter 13 bankruptcy may help

The temptation to do nothing can be great. At first, it seems easier to just ignore the problem rather than deal with it. Bills go unopened, the phone goes unanswered and the tension mounts. Sometimes the extent of financial problems that the Kentucky resident is facing is unknown. It is time to take action, and many times, Chapter 13 bankruptcy is the most appropriate action to handle the growing financial problem.

For many, the temptation is to just ignore their current financial situation. At best, the minimum payment amount is made on credit card debt. Credit card debt continues to grow as the individual continues to use the credit card for basic living expenses such as food and gas. In fact, the outstanding balance may barely even be touched with all money going mostly to interests and fees.

Chapter 7 bankruptcy or tap into accounts to pay off debt?

Debt consolidation loans, credit cards offering an interest free balance transfer option, home equity loans and even retirement accounts all offer the Kentucky resident options to pay off debt. In some cases, one of these options may be a good idea. However, depending upon the individual and his or her circumstances, Chapter 7 bankruptcy may be a more appropriate choice.

Debt consolidation loans and balance transfer cards allow the individual to shift debt and possibly reduce their consumer debt to just one vehicle. One thing to keep in mind with these two options is that the individual must qualify for the new loan. Home equity loans allow the individual to take equity from their home and pay off debt. However, the individual and property must also qualify for this new loan. Additionally, this type of loan will often transfer unsecured debt to debt secured by the home.

Petitioner accused of hiding assets in Chapter 7 bankruptcy

As with most things in life, filing for bankruptcy involves paperwork. This paperwork is an integral part of the process, and the finalized copies are likely to become court documents in Chapter 7 proceedings. With this in mind, it is essential that the Kentucky resident filing for bankruptcy is as accurate as possible when completing these documents.

The goal of a Chapter 7 bankruptcy is to discharge debt. As such, the individual is often careful to list each debt. However, another part of this type of bankruptcy is that some assets may be liquidated to help offset these debts. This is the area in which some individuals may struggle.

The bankruptcy automatic stay can do a lot for you

Nobody wants to file for bankruptcy, but if you find yourself in this position it's good to know the many benefits that can improve your finances and help you feel better about the future.

The automatic stay is one of the "hidden gems" of bankruptcy. Once you file for Chapter 7 or Chapter 13, this goes into effect as a means of protecting you from bill collectors and creditors. It also prevents anyone seeking money from you from filing a lawsuit.