Articles Posted in Frequently Asked Questions

If you are overwhelmed with medical expenses, you are not alone. I read an article recently where it stated that medical bills and accounts now represent over 50% of debt classified as being in collections status.   That’s huge!  According to the Federal Reserve, the government agency that keeps up with these things about 1 in 6 credit reports have medical debt collection accounts listed.  About 40% of these credit reports were also experiencing a lower credit score and the majority of these debts were listed as still unpaid.

There are two major issues.  One – people are struggling with the amount of medical debt that they are in – there isn’t a payment plan out there that would be feasible for them to attempt.   And two – people are struggling with somewhat manageable medical debt but the medical collections community seems to have absolutely NO desire to work with them on any type of reasonable payment plan.

I met with a couple the other day that make good money and had health insurance.  The husband recently had to undergo surgery and the bills were steadily coming in from the doctors, labs, and the hospital – but overall it wasn’t too bad.  The problem is that they all wanted their money immediately.  Pay or be sent to collections in 30 days. Pay the debt collector or be sued.  Be sued and be garnished or have your bank account frozen.

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The E-Government Act of 2002, contains laws governing privacy of information in court files in order to protect personal, sensitive, and private data from being available to the public.  Federal courts had to immediately update their rules and practices to be compliant with this Act.  These rules state that personal identifying information is prohibited and local rules also contain cautions and restrictions on the disclosure of other information deemed sensitive.

Specifically listed as examples of personal identifying information were:

  • Social Security Numbers;
  • Financial Account numbers;
  • and Birth Dates.

The following categories of information were deemed sensitive:

  • Personal identifying numbers, such as driver license numbers;
  • Medical records, treatments, and diagnoses;
  • Employment histories;
  • Personal financial information;
  • Proprietary or trade secret information.

The redacted documentrestrictions placed on personal identifying information are also applicable to sensitive information.  Federal Rule of Civil Procedure 5.2 and Federal Rule of Bankruptcy Procedure 9037 also contain sections on redacting personal data before filing it in court papers.

An individual’s Social Security Number and other private information is of no use and not a concern of the general public.  Interfering with the private affairs of a individual by disclosing this sensitive and personal information intrudes upon their right to privacy and creates a risk of identity theft. Continue reading

Secured creditors are creditors that have some type of property (ie. security) or collateral for the loan you owe. They have a lien on your property, which is an interest in property that allows a creditor to repossess that property if you don’t pay.  Your mortgage company has your house as security for the mortgage loan.  The auto finance company has your vehicle as security for the auto loan.  The local finance company may have some of your furniture and household goods as security for the money they loaned you.  These are all secured creditors.

Unsecured creditors are creditors who you owe money to, but they do not have the right to repossess anything if you don’t pay them.  Credit cards, medical bills, signature loans, payday loans are some examples of unsecured debts.

As soon as you file bankruptcy, an “Automatic Stay” goes into effect and stops all collection activity against you.  This happens automatically the second your bankruptcy is filed.  All creditors must stop trying to collect from you.  They must stop doing anything to get money from you; this includes making calls, sending letters, and filing lawsuits. An automatic stay will also stop foreclosures, repossessions and sales of property from moving forward. Now, if you don’t pay your house notes the mortgage company would have the right to start the foreclosure up again after your bankruptcy case is finished.

There are some important exceptions to the automatic stay.  It may not give you protection from some types of domestic support actions and it will not protect you from criminal charges made against you.

The automatic stay is temporary for secured creditors.  They must get permission from the court before taking any action. Bankruptcy does not allow you to keep property that is security for a loan without making payments on the loan. You don’t get anything for free.  If you don’t pay, a secured creditor may get court permission to seize and sell the property.

Commonly asked questions of married individuals needing to file bankruptcy:

Do married couples have to file bankruptcy together? If you are married there are three options for filing bankruptcy: 1) file together, 2) file alone, or 3) both file separately. There are several factors to consider when deciding if you should file jointly or alone. The biggest factors being how are the debts split between you, how much does each of you make, and who owns the property.

What about joint and co-signed debts?  When a debt is joint or co-signed, both spouses owe 100% of the debt.  It makes no difference what name comes first or who the debt was actually for. If your name is on the bill, you owe the whole thing.  If you file joint tax returns then you both owe the tax debt.

In chapter 7 bankruptcy cases you may be asked to sign a reaffirmation agreement for a loan, secured by collateral, that you wish to keep such as a vehicle, furniture, etc. A reaffirmation agreement is an agreement that says you want to keep the vehicle or the furniture and you will continue to pay the debt after the bankruptcy is over.  The creditor must agree to the reaffirmation, but in most cases they will agree because they want you to keep the property and continue to pay them.  They don’t want the property back.

A valid reaffirmation agreement places a legal obligation over you to continue to pay a debt that would have been wiped out in the bankruptcy.  If you become behind on payments after the bankruptcy, the creditor can repossess or foreclose on that property and sue you for the deficiency balance on the loan.

The Bankruptcy Code has many requirements that must be met for reaffirmation agreements to be valid. You should think long and hard about whether to reaffirm a debt and discuss options with your bankruptcy attorney, as this limits the benefits of your bankruptcy discharge.

Did you co-sign for your child’s car loan? Are you a co-signer on a loan for your friend? Have you co-signed for a loan for another family member? If so then you owe the loan the same as the primary borrower does.  It does not matter who has their name listed first or second on the papers.  If you signed the contract or the note then you are a co-signer and owe the full amount of the loan.  The primary borrower may be paying right now, but if something were to happen to stop payments, debt collectors will be hot on your trail for the balance.

Finance companies and banks do not release co-signers from loans.  They demand a co-signer so they will have someone to go after if the first borrower stops paying. They knew up front that the first borrower was at high risk to stop paying and they wanted you to be there so they could go after you for part of the debt, half of the debt, or all the debt. They will go after whomever is the easiest to collect from.  So think long and hard before you become the co-signer of a debt for someone – and if you do – make sure you are willing and able to pay the whole debt if something happens.

Cheap Lawyers are everywhere, but you may not be able to afford them.

You can see a lot of lawyers bragging about being the cheapest. Search on the web and you will see ads for “Cheap Bankruptcy Attorney,” “Low Fee Bankruptcy.”

We all know that quality and cheap don’t go together. If we buy cheap we know it will cost us more in the long run. You get what you pay for. This is no surprise. We expect it and make buying decisions knowing what will happen. When it comes to hiring a lawyer, hiring the cheapest is not the way to go. The risks are just too great.

credit cardsCan you pay your credit cards after filing bankruptcy?  Of course. You can pay anyone you want to pay. But should you? Let’s explore whether first of all you can keep them, and second if you have anything to gain by paying debts that were wiped out by the bankruptcy court…

Can you keep your credit cards after filing bankruptcy?  You should know that your credit cards will be canceled by the creditor once you file bankruptcy.  Even if you want to keep them and continue to pay, they will be canceled.  Credit card companies are constantly checking your credit reports and the moment they see the bankruptcy they will cancel the card.  This is a surprise to many people who thought that by not listing one or two cards in their bankruptcy, they could keep using them.  No company is going to let you keep a credit card. They all want you to reaffirm the debt and pay it off, but they will not extend the current credit privileges, even if you agree to pay what is owed. Now after filing bankruptcy, you may get flooded with new offers for credit cards (some offers may even be from the same companies!) but they will not allow the current account to remain open.

Why? Once a debt is discharged in bankruptcy, the creditor can’t have any contact with you. No letters, no phone calls, no law suits, no efforts to collect, and no reports to the credit bureau. You can sue them if they violate these rules. So if you repay the debt, the creditor can’t and won’t report it on your credit record. They will take the money, but you won’t any recognition or credit for paying it.