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Debt Discharges In Bankruptcy

Debt Discharges In Bankruptcy

When you successfully resolve and complete a bankruptcy, some of your debts will be labeled as "discharged". This means that your debts are no longer enforceable for collections by the creditor. This is the ultimate goal of filing for bankruptcy and the desired outcome by anyone seeking its protection.

The end result of a successful case is a debt discharge can vary depending on the type of bankruptcy you file; Chapter 7 or Chapter 13. How the debts are managed in either of these types of bankruptcy is important to consider before you seek debt relief through bankruptcy.

Closed Case

When you file a Chapter 7 case, the court will evaluate your eligibility under the means test, which includes information about your assets, income and debts. The Chapter 7 means test evaluates your income and asset level to determine you have the financial ability to repay some or all of your owed debts. Debt repayment may be done through monthly payments of a calculated portion of your disposable income or through the liquidation of some nonexempt assets. It is important to note that the court will not require you to pay an amount, or liquidate assets, that would cause you further financial burden.

When you file a Chapter 13 case, the court will evaluate your income to debt levels to determine an affordable repayment plan. A Chapter 13 plan allows you to spread out your payments over the course of three to five years. An important difference to note when seeking debt relief is that repaying debts under a Chapter 13 plan also provides more protection for even nonexempt assets, like luxury items and secured debt collateral.

In either a Chapter 7 or a Chapter 13 case, it is important to note that there are some debts that are not eligible for a discharge and will require repayment. These are called "priority debts", and are considered required for repayment. Common examples of these debts not eligible for a discharge are alimony, child support, debts accumulated fraudulently and criminal restitution payments. Further, some tax debts and student loan debts may also not be eligible for discharge in bankruptcy.

If you are considering bankruptcy, speak to a Sacramento bankruptcy attorney about your debts to ensure you obtain the best outcome in your case filing.

Debt Collection Protection

Debt Collection Protection

Fair Debt Collection Practices Act (this is part of the Consumer Credit Protection Act) provides consumers with protections against unlawful or unethical debt collection practices. Under the FDCPA, debt collectors must follow certain rules about contacting consumers. For example, debt collectors generally have to stop trying to collect a debt that becomes past-due 90 days, and you can ask them to stop contacting you about the debt. Debt collectors may contact you about your debt, but only certain ways and under certain rules. For example, they may contact you in writing, but not by email or cell phone.

Individuals and people that have been victimized by a debt collector can actually receive money as compensation. While these actions may be a violation of the FDCPA, there are attorneys that specialize in these kinds of cases. So if you have been a victim of debt collector harassment, seek the help of a debt collector harassment attorney to understand your rights and protect yourself.

The FDCPA prevents any and all types of collection practices that are considered abusive, deceptive, misleading or dishonest.  However, this law alone cannot solve your debt collection problems.

If you are experiencing problems paying your debts or making ends meet, being harassed by creditors or worried about upcoming harassment, or have been getting behind on payments; contact a Sacramento bankruptcy lawyer today. An experienced bankruptcy lawyer can review all of your debt relief options, from debt counseling to bankruptcy; helping you make an informed decision about your debt relief and creditor defense actions.



Make a Plan to Be Debt Free

Make a Plan to Be Debt Free

This year has been filled with unexpected events and outcomes for many families.  A turbulent economy, unexpected challenges in careers, and the loss of the comforting sense of status quo have all presented unique challenges to daily life. In times of uncertainty, it is more important than ever to keep a close hand on your financial habits and not use a back-burner approach to managing your debts.

Outline Your Goals

The first step in any plan to resolve a barrier, financial or otherwise, is to outline your goals. What objectives do you have for growing your savings account? Do you have growing debt burdens that need addressing before you can plan for saving? Are there any assets at risk of repossession over faltering on debt payments? These questions and more are the pillars of your plan to develop into steps of action.

Create Actionable Items

Once you have your goals outlined, rank them in order of importance. Any debts that are tied to assets or at risk of being lost to creditors are priority. Lower level debts, such as unsecured medical debts and some credit card debts, would come later in your plan. Using the rank of importance, list the total debt owed and re-rank them by highest balance. Try using one of several debt repayment strategies such as the “snowball” method, in which you focus all extra income towards your lowest balance debt first until paid off. Continue this process with each subsequent debt until you reach your goal.  If you have secured debts that are tied to assets, or at risk of losing property, stop planning and consult with a Sacramento bankruptcy attorney. Your attorney can halt debt collections, while protecting your property through bankruptcy exemption laws.

Consult a Professional

When looking to get out of debt, there is no one-size-fits-all approach. Everyone has a unique financial situation that should be carefully considered before consolidating debts through a loan, or negotiating with creditors. While you may be able to successfully navigate debt relief options or a bankruptcy alone, there is more risk of harm in doing so. If you want to get out of debt while minimizing any impact to potential assets, consult with a Sacramento bankruptcy attorney for professional guidance.

Credit Scores After Bankruptcy

Credit Scores After Bankruptcy

There is a misconception that filing for bankruptcy damages your credit and prevents you from securing credit in the future. In fact, this is one of the most common excuses people have for not seeking debt relief help through bankruptcy. This misconception can do more harm than filing for bankruptcy in many cases, as it prevents people from making an educated decision to seek financial relief.

Credit Myth Busted

While there is truth to a bankruptcy mark being noted on your credit profile for up to ten years, the mark of having filed for bankruptcy doesn’t actually impact your score in ways that you would assume. Most people think their score will drop after a bankruptcy filing when, often, the opposite is true.

Bad credit scores are created through delinquent debts, missed debt payments, high debt balances, and a ratio of debt-to-limit that exceeds 30%. In other words, debt balances that are nearly at the maximum limit allowable can bring down your credit score quickly. When you file for bankruptcy, you are either provided a plan to repay a portion of your debts through Chapter 13 or your qualified debts are eliminated through a Chapter 7 discharge. When these debts are paid down until resolved or eliminated in Chapter 7, your debt balances are lowered and the debt-to-limit ratio is brought down. The results of a debt discharge can actually improve your credit score following bankruptcy if you have started the process with a relatively low score.

Each bankruptcy case is unique to the individual filing for debt relief, as it is based on their combination of debts and assets. It is recommended to always work closely with a Roseville bankruptcy attorney when seeking debt relief consultation and assistance. An experienced attorney can best guide you to debt relief while working to protect your assets and income accounts.


Medical Debt and Bankruptcy

Medical Debt and Bankruptcy

Two of the most common types of debt include secured and unsecured. Secured debts, like car and home loans, are tied to collateral that can be repossessed if you fail to make a payment. Unsecured debts, like credit cards and payday loans, are not tied to collateral or assets; making them much easier to resolve in bankruptcy. Thankfully, medical debts fall into the unsecured debt category.

Is medical debt dischargeable through bankruptcy?

Yes, it is. If you file for a Chapter 7 bankruptcy, the medical debt is probably completely dischargeable no matter what the amount is. If bankruptcy leads to discharge, one is not bound by an obligation to pay back any of the medical bills incurred and not paid for by the insurance coverage. The specific debt must be listed when filing a bankruptcy petition. In Chapter 13, the medical debt will be lumped in with the rest of one's unsecured debt, and creditors will receive a pro-rata portion of one's payments toward unsecured debt in the Chapter 13 plan.

What relief is available to me through bankruptcy?

The Chapter 13 trustee will receive payments over three to five years following a plan confirmation by Chapter 13 bankruptcy filers. The trustee will disburse all payments amongst a debtor’s creditors in the order of priority. The general unsecured creditors will remain at the bottom of the priority list. Per debt relief rules, secured creditors are paid on a monthly basis in order to maintain the collateral of the loan. The healthcare costs or medical debt related to medical care will be in the last category of debts paid. While student loans are regarded as unsecured debts they are usually non-dischargeable through bankruptcy unless the debtor can demonstrate convincingly that he or she has an undue hardship.

There is a vital difference between Chapter 7 and Chapter 13 bankruptcy filers

Chapter 7 filers will receive the maximum discharge of eligible debts but sometimes their assets are sold to satisfy some of the debt. On the other hand, Chapter 13 candidates will repay some of their debts before receiving a discharge, but they are allowed to keep all of their assets without the risk of sale.

If you would like more information about your medical bills or other debt, contact a Citrus Heights bankruptcy attorney to discuss your options.

Money Management and Bankruptcy

Money Management and Bankruptcy

It might seem that there is a direct connection between money management and bankruptcy. Money management skills are not always about being prepared or staying alert about your money. However, the financial burden is often unexpected and more complicated than it appears. Filing for bankruptcy can be a solid plan for debt relief when the financial burden becomes unbearable. 

Bankruptcy as a Method of Money Recover

If you are stuck with a lot of debt, it might not seem that there are good strategies to get out of debt. For many people in those circumstances, bankruptcy may come to the rescue. Bankruptcy law exists as a path to financial freedom.

Chapter 7 or Chapter 13 Bankruptcy

You can file for personal bankruptcy under Chapter 7 or Chapter 13 and expect to get your unsecured debts resolved. Depending on your circumstances, bankruptcy can eliminate your debt and protect your assets. For example, it is commonly known that preventing foreclosure is not easy. However, you can avoid foreclosure with a Chapter 13 bankruptcy filing.

It would be best if you always aimed to take advantage of the provisions of the bankruptcy code whenever there is a requirement on a burgeoning debt. Bankruptcy should still be considered as a convenient tool in your arsenal of money management techniques. 

If you have unbearable debt and would like more information on how to get a fresh financial start, contact a Sacramento bankruptcy attorney today.