September 13, 2023
Foreclosure is the legal process by which a mortgage lender takes possession of a property when a homeowner fails to make their mortgage payments. The lender typically uses it as a remedy to recover the money owed on the mortgage loan when the borrower defaults on their payments. Unfortunately, foreclosure is rising in many US cities, including New Haven, Connecticut.
Foreclosure on the Rise
Connecticut, like many other states, implemented measures to protect homeowners from foreclosure during the COVID-19 pandemic. After the moratorium on foreclosures was lifted, there was an influx of foreclosure filings. The uptick was caused by mortgage lenders catching up to homeowners who fell behind on their payments. Moreover, since then, the cost of living has continued to climb. The effects of inflation on daily expenses, such as food costs, have made money tight for many New Haven, CT families. Consequently, some have struggled to pay the mortgage.
There has also been a significant upswing in home values throughout Connecticut, which is generally seen as a positive trend for homeowners. However, for some individuals, the challenge lies in managing their heightened property tax assessments. According to ATTOM, Connecticut has some of the nation’s highest effective property tax rates at 1.57 percent, just behind New Jersey and Illinois.
During financial difficulties, it’s essential to make contact with the mortgage lender. Homeowners should proactively communicate with their lenders when they encounter financial problems to explore options for avoiding foreclosure. Early communication and cooperation are key factors in finding a solution that benefits both the homeowner and the lender. While a lender may not be inclined to modify monthly payments, they can provide assistance and alternatives to aid a borrower with getting up to date on mortgage payments.
Lawyers can also play a crucial role in helping individuals facing foreclosure by providing legal advice, representation, and assistance. Attorneys can negotiate with mortgage lenders on behalf of homeowners to investigate alternatives for preventing foreclosure—for example, loan modifications, forbearance agreements, or customized repayment plans. Lawyers frequently utilize their legal expertise and adept negotiation abilities to attain more advantageous terms on behalf of their clients.
The possibility of losing a home can be challenging to come to terms with. For some, there may be plausible options for preventing the foreclosure process. A Connecticut foreclosure lawyer from The Law Offices of Ronald l. Chorches will help. Schedule your consultation today.
May 6, 2023
Foreclosure is the legal process that ensues when a borrower fails to make timely payments on a home loan, and the lender takes possession of the house as collateral. The lender generally gives the borrower a specific timeframe to bring their loan up-to-date and prevent foreclosure. Suppose a foreclosure sale has not yet occurred. If a debtor files for bankruptcy, they can promptly halt the foreclosure unless they have filed for bankruptcy within the last year. Bankruptcy can help save property from foreclosure by preventing lenders from taking immediate action to give the debtor time to find solutions. Here’s how various forms of bankruptcy can help:
Chapter 7 Bankruptcy
Chapter 7 bankruptcy triggers an automatic stay that halts creditors from taking action, including lenders foreclosing on a property. By activating an automatic stay to stop creditors, the borrower can catch up on missed payments and avoid foreclosure. However, in many cases, the lender will quickly file a motion for relief from the automatic stay to seek permission from the bankruptcy court to move forward with the foreclosure. For this reason, filing for Chapter 7 bankruptcy will only briefly pause the foreclosure process.
While it’s essential to note that Chapter 7 bankruptcy does not provide a long-term foreclosure solution, this type of bankruptcy can help save a property from foreclosure because it buys the borrower time to pay missed mortgage payments, seek refinancing, or look into loan modification to keep the home. If the borrower cannot catch up on missed payments or make current payments, the lender will resume foreclosure proceedings once the automatic stay is lifted.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, also called reorganization bankruptcy, enables the borrower to retain their property by settling their debts over three to five years. The debtor will make monthly payments to a bankruptcy trustee whose job is to make payments to creditors, including missed mortgage payments. During this time, the debtor will still be making monthly mortgage payments. If the debtor makes all payments on time and according to plan, the property will not face foreclosure.
Please note that the debtor must possess a stable income to be eligible for Chapter 13 bankruptcy. They must be able to fulfill the monthly payments as per the repayment plan terms. Therefore, Chapter 13 bankruptcy is typically advised for individuals who still have a job but find it challenging to keep up with the debt they owe. This form of bankruptcy is helpful when facing foreclosure because it allows debtors to reorganize their secured debts, such as mortgages, while keeping the asset, such as the house.
Foreclosure Mediation Programs
Connecticut offers Foreclosure Mediation Programs that should be explored when homeowners file for bankruptcy. These programs aim to negotiate new mortgage terms between homeowners and lenders that are more manageable. A neutral third-party mediator facilitates communication between the two and finds a solution acceptable to both parties. The mortgage lender may agree to extend the loan term, reduce the interest rate, or even forgive a percentage of the outstanding principal. These programs are beneficial for those who have experienced financial hardship, such as job loss.
Facing foreclosure is hugely stressful. Please know there is hope. There are many options to investigate before giving up. We can help you explore ways to save your home based on your financial situation. Contact us today to learn more about how we can help you.
January 24, 2020
If you are considering filing a personal injury lawsuit after someone else caused a recent injury, a very natural question is “How much is my case worth?” However, this is not really the right way to think about things. The purpose of personal injury lawsuits is to compensate a victim for losses. This means your case is worth exactly how much you lost. Of course, things are a little more complicated than that. The first step in understanding how much your case is worth is understanding the different types of damages.
Special Compensatory Damages
The first type of damages is special compensatory damages. These damages correspond to financial losses. If you can place an exact monetary value on a loss, then it will fall into this category. Examples of this include:
- Medical bills
- Damage to property
- Lost wages
- Loss of earning ability
- Purchase of medicine
- Purchase of medical equipment
For all of these losses, their monetary value is objective. Before you step foot into the court room, you could look at receipt or bill or wage log and know exactly how much money you lost.
General Compensatory Damages
The second type of damages is general compensatory damages. These damages correspond to non-financial losses. If you suffered in some way, but it is impossible to objectively place a monetary value on your suffering, then it will fall into this category. Examples of this include:
- Pain and suffering
- Emotional distress
- Loss of mobility
- Loss of companionship
- Loss of enjoyment of life
As you can probably tell, the monetary value of all of these is subjective. The only way you could determine it is by making an estimation. When general compensatory damages are accepted in a court case, the judge will be the one to decide how much they are worth.
The third type of damages is completely different from the other two. Punitive damages are not a form of compensation. Instead, they are assigned as punishment for the defendant. The judge will be the one to decide if punitive damages are appropriate, as well as how much potential punitive damages should be.
So, now that you know about the types of damages, you can estimate what your case is worth. It will be the sum of special and general compensatory damages. Punitive damages are rare in personal injury cases, so you should not expect to receive any. Speaking with a personal injury lawyer in Washington, DC can help you estimate these values more with more precision.
Thanks to Cohen & Cohen, P.C. for their insight into personal injury claims and what your case may be worth.
September 10, 2019
In the majority of situations, filing for a chapter 7 or chapter 13 bankruptcy should not adversely affect your immigration status.
For starters, you don’t need to be a US citizen or even have a green card to file for bankruptcy protection.
The key requirement is that you must be a US resident which generally means showing or proving that you’ve lived in America for a substantial amount of time such as six months or more.
Even better, your citizenship application, visa or green card applications should and will continue even if you do file for bankruptcy.
The United States Citizenship and Immigration Services (USCIS) can’t deny your application just because you filed for bankruptcy.
The Bankruptcy Code, Section 525 (a) is the law that prevents the federal government from discriminating against anyone who files for bankruptcy protection. The section provides:
“…A governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.”
How a Bankruptcy Petition Could Be Used by Immigration Authorities
Generally, anyone seeking admission to the United States through the immigration process must show they have good moral character.
If you’ve been convicted of a crime, if the immigration officials have reason to believe you lied on any forms, or if the officials believe that you lack morality; your immigration application may be denied.
USCIS also wants to make sure immigrants seeking admission into America don’t become a financial burden.
Mostly, they’re looking to see if you can, or are working.
The government doesn’t want to have to pay for welfare and other financial assistance.
The fact that you declared bankruptcy may actually help to show and prove that you are working to resolve your debt situation.
Situations Where Filing Bankruptcy Could Affect Your Immigration Status
While the act of filing for bankruptcy shouldn’t disqualify you for immigration, the items on the bankruptcy petition, and your conduct during the bankruptcy process could be used against you.
Here are a few ways the underlying facts behind the bankruptcy petition may hurt your chances for immigration approval:
- You ran up large debts to pay for items you clearly knew you could never afford.
- If it is clear from the creditor list and your income that you were never ever going to be able to pay for lavish expenses, that may be problematic.
- You may be asked about your taxes. Many people get behind on their tax obligations.
- If, however, you lied about your taxes to the IRS or any official for that matter, the lie could be used to deny your immigration applications.
Generally, immigrants are productive people who pay a lot of money into the government (through taxes and social security) even though they are not entitled to those benefits unless they become an American citizen.
Immigrants, like every existing citizen in America, can develop financial problems due to a bad marriage, medical difficulties, and credit card debts.
They may not be able to pay for a home or apartment.
Not being able to pay your bills shouldn’t disqualify you – unless you were dishonest, lied, or committed a crime to get the funds originally.
For immigrants, like American citizens, a bankruptcy is nothing to be ashamed of or frightened of – it is your right.
Bankruptcy provides a legitimate second chance for many people each year including American citizens and immigrants alike.
Bankruptcy and Criminal Offenses
If the bankruptcy court believes you committed a crime, then that crime could be used against you.
Possible bankruptcy crimes include:
- Lying under other;
- Providing financial statements that you know to be false;
- Not providing information about income or debts that you were supposed to provide on your bankruptcy forms
Very few people are charged with bankruptcy crimes.
Many usually are just told to provide the accurate information within a specific time frame.
If you are charged with a bankruptcy crime, then your bankruptcy petition could be denied.
If USCIS learns of the bankruptcy crime after examining your bankruptcy records, then you could be deported if you are an immigrant.
You may even be barred from re-entering the United States, or be unable to re-enter for a specific number of years.
Experienced bankruptcy lawyers successfully work with immigrants.
We explain what you must list on your bankruptcy petition paperwork and the need for you to be honest in everything your report to the US Bankruptcy court.
We also explain that you must be truthful at the mandatory creditor’s meeting before the US Trustee in Bankruptcy.
Filing Bankruptcy After Sponsoring an Immigrant
If you are sponsoring an immigrant for a visa or for citizenship, generally, you can still sponsor that person even if you file for bankruptcy.
If you sponsor someone and they need to go on to public assistance, you may need to repay public assistance.
The Take Home
The bottom line is that if you’re an immigrant and seeking citizenship, even if you declare bankruptcy, you’ll still be able to become a citizen. All you need to do is make sure you’re honest about your financial situation, and that you remain crime free. If you’re considering bankruptcy, view our full list of bankruptcy services to see how we can help you rectify your financial situation and help get you out of debt.
For the best results, contact your local bankruptcy attorney and they’ll be able to guide you on the right track and ensure your case is heard and you’ll be properly represented.
Disclaimer. Please not that this article does not establish a lawyer/client relationship. Further, anyone with concerns about their immigration status should speak with an experienced immigration lawyer. The discussion in this article is to address the issue from just the bankruptcy side – and again bankruptcy clients should meet with an experienced bankruptcy lawyer.
August 30, 2019
The main concern will be for jobs where you are expected to be good at handling money as part of your job requirements.
However, bankruptcy may affect your ability to get or keep a job which requires certain types of security clearances.
But in most cases, your employer won’t even know that you filed for bankruptcy unless you tell them.
In other cases, the employer may learn that you have but probably won’t have a problem with the filing.
Keeping your job if you already have one
Generally, no employer (whether a public employer or a private employer) can fire you from your job because you declared bankruptcy.
The right to file for bankruptcy protection is actually set forth in the US Constitution.
Additionally, public and private employers can’t alter the terms of your employment if they discover your bankruptcy.
This means that the employer:
- Should not reduce your wages or salary because you declared bankruptcy
- Should not assign you to a lower paying job, or a job that requires less skills or talents
You can lose your job or be demoted because of general work performance issues such as dishonesty, being late to work, not performing your job duties, and not achieving the results the employer expects.
But when it comes to bankruptcy, you’re completely protected.
How an employer might find out about your bankruptcy filing
There are two main types of consumer/debtor bankruptcies.
You use a Chapter 7 bankruptcy if you don’t have secured debts such as a home or such as priority debts that you need time to pay off – but that you can’t discharge.
Most people use Chapter 7 if they have credit card debt or debts due to medical expenses.
In a Chapter 7, you typically file the bankruptcy petition, attend a creditors’ meeting, and then about six months later – your unsecured debts are discharged.
Normally, the court or trustee doesn’t notify the employer.
Generally, an employer will find out about the fact that you filed for bankruptcy protection if they were already paying a creditor through an existing wage garnishment.
A wage garnishment generally arises when a creditor obtains a judgment against you.
Some states allow the creditor to garnish you wages – to take a preset amount or a percentage of your pay, before you are paid your income.
If you file for bankruptcy protection in a Chapter 7, then the court or trustee or your lawyer will normally inform your employer that your debts have been discharged (on successful completion of the bankruptcy process) and that there is no more need to garnish your wages.
Since the employer knows your debts have been discharged and they don’t have to do the paperwork to garnish your wages, most employers are actually glad that your financial burden is behind you.
If you file a Chapter 13, then you have to propose a plan to pay your secured creditors and non-dischargeable debts.
You’ll also need to pay a percentage of your unsecured debts such as your credit cards.
The plan requires you to make monthly payments to the trustee in bankruptcy.
Many bankruptcy courts only require that they get the money on a timely and regular basis.
They don’t care if you pay the monthly amount from your income or if the employer pays it through garnishment.
If you ask your employer to pay the trustee, then the employer will learn of your bankruptcy.
In some courts, especially if you’re late on your payments, the trustee may ask the court for approval to deduct the payment from your paycheck.
If you owe your employer money, then you do need to list that debt on your bankruptcy petition, and then of course your employer will then learn that you have listed them as a creditor.
How bankruptcy affects job applications
No public employer (federal, state, or local) can consider the fact that you filed for bankruptcy when evaluating you for a job.
The same isn’t true for applicants filing for a private job.
While many employers only want to know your experience and your credentials, some employers may have a reason to ask to run a credit check on you.
Bankruptcy petitions stay on your credit record for 10 years, so an employer who runs a credit check may learn that you have filed for bankruptcy.
Employers do need your consent to run a credit check but they can refuse to hire you if you don’t give them permission.
Just because an employer learns that you’ve filed for bankruptcy doesn’t mean you’re automatically disqualified.
Most employers still want to know if you can do the job.
Many employers understand that people get into debt problems.
They also know that having a job is the only way most people can pay their bills.
The potential employer may ask about the circumstances that led to your bankruptcy so that they can feel confident in hiring you.
If you had medical bills, they’ll want to know if your medical problems were taken care – so you can work.
If you had problems due to drinking, they may need some assurances that you are now sober.
A few exceptions
If you are being hired to work with money such as an accountant, then the employer will likely want some assurances that your debt problems were due to other causes (such as medical surgery that wasn’t covered) and not your inability to handle finances.
Some jobs may require a security clearance such as work with the military, with some federal agencies, or with some contractors who do business with federal agencies.
The decision about your security clearance will consider several factors.
There is some concern that people with debt problems could be subject to blackmail.
On the other hand, filing for bankruptcy does show that you are ready to handle your debts and the bankruptcy petition may, very well, work in your favor regarding a security clearance.
June 10, 2019
The short answer is yes: tenants that rent an apartment or residence may be able to use a bankruptcy to postpone or even stop an eviction.
Bankruptcy is generally used to help people that can’t pay their secured debts such as home mortgages and car payments.
Bankruptcy is also useful in helping discharge unsecured debts such as credit card debts and medical bills.
Medical bills can include hospital bills, doctor visits, and even the cost of medications.
Generally, people in debt use a Chapter 7 to discharge their unsecured debts and use a Chapter 13 to discharge secured debts.
A debt is considered secured if you agree – when you accept the loan to buy a home or car – that the person or company that gave you the loan can sell your home or car if you default on the loan repayments.
Read more details about the differences between secure and unsecured debts here.
Chapter 13 requires that the debtor file a plan in bankruptcy to pay the amount they are behind over a three to five-year period.
All future loan payments must be paid on time.
Staying In Your Home
To stay in your home you still must keep up on your payments.
In home mortgage situations, you can file a Chapter 13 bankruptcy to avoid foreclosure action.
A rental eviction situation is similar but not the same as defaulting on home mortgage payments.
In both cases, the you may no longer be able to keep living in the place where you live and sleep.
And in both those cases, a creditor will eventually try to force you out of their home.
If a you’re in debt, and you own your home, the creditor will try to use a foreclosure action, but foreclosure can be stopped.
If you rent your home, the creditor will attempt to use an eviction action.
The Key Differences
The key difference is that the tenant does not have any ownership interest in their apartment or property.
A second key difference is that the tenant’s rights are determined by the landlord-tenant lease.
In most cases, leases are year-to-year agreements and landlords can refuse to extend a lease beyond the yearly period for almost any reason.
The tenant may consider leaving voluntarily and staying with friends or family until he/she can afford a new apartment to live in.
The Automatic Stay May Stop Tenant Eviction
If you need to continue living in your apartment, declaring bankruptcy and using the automatic stay can offer some help.
Generally, the moment you file a bankruptcy petition with your local federal court, all collection actions and court actions against you must immediately cease.
If a creditor wishes to proceed against you, he/she must convince the bankruptcy court that the collection and eviction actions should be allowed to continue outside of the bankruptcy court.
When landlords seek to evict a person for nonpayment of the rent, the landlord has two concerns.
- The first concern is that they want to remove the tenant from the building premises – from their apartment
- The second concern is that the landlord wants to be paid for the rent that is due
When a tenant files a bankruptcy, initially there is little the landlord can do to force the tenant to pay the arrearages on the rent, however in some cases landlord does have options:
Filing bankruptcy creates an “automatic stay,” which means that creditors cannot take any action against the debtor without court permission. However, the landlord can still pursue and collect back rent from any guarantors named under the lease, even while the tenant is in bankruptcy. [source]
If the tenant files a Chapter 7, then he/she can normally discharge – with court approval – the past due rental payments.
If the tenant files a Chapter 13, then he/she does pay off the rental arrears over a three to five-year time period.
Generally, if the tenant doesn’t own the property, he or she will not normally use a Chapter 13 unless they are trying to keep their vehicle from being repossessed at the same time. Other rare situations may also justify filing a Chapter 13 bankruptcy.
How Bankruptcy Helps The Landlord
Usually, a landlord who sought to evict a tenant will be able to seek their own relief from the bankruptcy court.
Relief means that the landlord may be able to proceed with the eviction proceedings depending on the circumstances.
Relief isn’t immediate though. The landlord will still need to file papers with the court and wait the allotted time before any action can be taken.
In such cases, the court will likely set up a hearing date so the tenant has a chance to contest the landlord’s request to continue with the eviction.
The bankruptcy court will normally consider a variety of issues in deciding whether to allow the landlord to proceed with the eviction.
These factors include:
- What is the reason the landlord is seeking to evict the tenant?
- Is it an overall financial issue or just a rent problem?
- Is the tenant destroying the property?
- Is the tenant violating the lease by keeping a pet when no pets are allowed?
- How far along are the eviction proceedings?
- Has the tenant made payments in the interim?
If the only reason for the eviction is nonpayment of rent and the tenant catches up on the rent due, that can affect the right to evict regardless of whether there is a bankruptcy case.
As a practical matter, a discharge in bankruptcy doesn’t take that long – usually four to six months.
If the eviction proceeding does take too long, it may make practical sense for the landlord to wait until the discharge is complete.
These are sometimes complicated situations which is why consulting with a bankruptcy attorney is your best recourse.
What if the tenant is a commercial tenant?
Evictions that affect a business are usually treated differently than evicting someone from where the live and sleep.
A commercial tenant may have an option to buy the place they are renting.
In this case, the tenant may be more inclined to file a Chapter 13 bankruptcy.
Filing For Bankruptcy is a Difficult Choice
People declare bankruptcy for many reasons including loss of income, medical difficulties, divorce, and other reasons.
Sometimes solutions can be worked out short of filing for bankruptcy or going to court for dispute resolution.
When creditors such as landlords won’t negotiate, then filing for bankruptcy may be the only option.
In such cases it’s a great idea to call your local bankruptcy attorney and consult with them regarding your options.
Each situation is different and getting professional representation is the best course of action you can take and will offer you a better chance of protecting yourself from being evicted.
May 7, 2019
In these tough financial times it’s common to worry about whether bankruptcy would mean losing your 401k. For the most part, 401K plans and other retirement plans can be protected in a federal bankruptcy. Protection means that creditors won’t be able to claim your assets.
A 401 (k) plan is a specific type of pension plan that is defined by section 401 (k) of the Internal Revenue Code. It is mostly used by employees who deduct the contribution to their 401 (k) from their pay-check before the income is taxed.
Many employers do match the amount of the contribution. 401 (k) plans encourage employees to save and encourage employees to stay with one company.
The taxes are essentially deferred until the employee retires.
The savings is based on the fact that most retired employees are in a lower income bracket when they retire than when they worked.
There are limits as to how much you can contribute into your plan. As of 2019, the limit is $19,000.
There are other types of IRS approved plans depending on where you work and whether you or some other entity is making the contribution.
Bankruptcy exemptions allow you to exempt many different types of property.
An exemption means that creditors can’t demand that your exempt property be sold by the trustee in bankruptcy to pay the your debts.
11 U.S. Code § 522 Section 3 C specifically exempts the following property:
“(C) retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.”
In addition, ERISA assets are not considered part of the debtor’s estate. ERISA stands for the Employee Retirement Income Security Act.
Most 401 (k) accounts qualify for this ERISA protection.
Your employer can inform you whether your retirement plan, such as 401 (k) is an ERISA account.
Property That is and isn’t Part of the Estate
There is a key difference between property that isn’t part of the estate in the first place and property that is part of the estate.
If the property is part of your estate, you must use an exemption statute, such as 11 USC 522 3 C to protect the property from creditors.
Funds that don’t qualify for ERISA protection need to use an exemption. In addition to 522 3 C, 11 USC 522-n can also provide an exemption for many 401 (k) accounts. 522-n provides:
(n) For assets in individual retirement accounts described in section 408 or 408A of the Internal Revenue Code of 1986, other than a simplified employee pension under section 408(k) of such Code or a simple retirement account under section 408(p) of such Code, the aggregate value of such assets exempted under this section, without regard to amounts attributable to rollover contributions under section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the Internal Revenue Code of 1986, and earnings thereon, shall not exceed $1,000,000 in a case filed by (a) the amount of the 401 (k) and most other retirement accounts that can be exempted is now $1,362,800 for each debtor.
What Actions Can Affect the 401 (k) Protection?
There are many and it’s advised that you review with your bankruptcy lawyer which actions could affect the safety of your 401 (k) account from creditors.
The funds are generally safe provided they aren’t touched before you are old enough to access them.
Generally, employees or former employees can take money from their 401 (k) without penalty once they reach the age of 59.
Once a person reaches 70, the owners of the account are required to withdraw funds from the account.
If a debtor takes any funds from the 401 (k) account and places those funds in another account such as a personal checking account, the funds can then be attacked by creditors – unless another exemption can be shown to apply.
If the 401 (k) account or any retirement account was created through fraud, then the account may be subject to attack by creditors.
How to Protect All Types of Retirement Accounts
One of the key items to review is how to protect all types of retirement accounts such as 401 (k)s, IRA accounts, pensions, and any plans that have special protection through the Internal Revenue Code.
You may be tempted to use your 401 (k) or retirement benefits to pay your debts.
While that may be a viable option, you should understand that once you file bankruptcy – it’s often a better option to keep your 401 (k) and other retirement assets so you can get a fresh start when you receive a bankruptcy discharge.
A lot will depend on whether you are seeking to discharge unsecured debts such as medical bills and credit card debts through a Chapter 7 bankruptcy or whether you are looking to pay secured debts and secured arrearages through a Chapter 13 bankruptcy.
Chapter 7 bankruptcy is generally used when you don’t have homes or cars you want to keep.
You simply declare bankruptcy and list all the unsecured debts you have.
Property that is excepted or exempted can be saved. Property that can’t be protected is sold and used to pay your creditors.
Chapter 13 bankruptcy is used to save secured assets.
A secured asset is an asset that can be sold by the creditor who gave you the loan for the asset.
The most common example is a mortgage for a home or a secured car loan.
Debtors offer to pay off any arrears on the secured assets over a 3-5-year period.
They also agree to pay the continuing secured loan. If they pay off the plan, their assets are saved.
At the Law Offices of Ronald I. Chorches, we advise debtors about assets such as 401k plans, they can save and when those assets could be sold for the benefit of creditors. Bankruptcy consultations are free so view our services to see how we can help you.
February 11, 2019
Even if you have health insurance, medical expenses can still overwhelm you. Without insurance, just one medical emergency or the need for treatment can mean the a patient can quickly get into extreme debt. It’s no surprise that people claiming bankruptcy due to medical debts, is on the rise.
Types of Medical Debt Most People Encounter
People need medical services for different reasons. Just one night in a hospital can cost upwards of $50,000. Common medical expenses that can cost a fortune include:
- Surgeries and hospital stays
- The cost of anesthesia
- Ambulance costs
- The cost of emergency room care
- The cost for seeing specialists such as cardiologists, oncologists an orthopedists
- The expenses to see your family doctor
- Therapy costs including physical therapy, occupational therapy and speech therapy
- The cost of medical devices such as prosthetics and wheelchairs
- Medication expenses
- Travel costs to and from the health providers
Often times, patients need to see their doctor or therapist multiple times which means a charge for each visit.
The Relationship Between Medical Expenses and Bankruptcy
CNBC reported that a study done by NerdWallet Health showed that nearly 2 million people filed bankruptcies in 2013 due to unpaid medical bills – more filings than were due to unpaid mortgages and unpaid credit-cared bills. The study examined Census Data, data from the federal courts (where bankruptcies are filed), and the Centers for Disease Control.
The study also found nearly one in five Americans between the ages of 19 and 64 struggle with and need help paying their medical expenses.
The Balance reported the following relationship between medical debt and bankruptcy in January 2019
- The studies on the amount of bankruptcy filings differ from year to year depending on the state of the economy. The Great Recession increased the number of bankruptcy filings.
- A study done by Elizabeth Warren and researchers found that 62 percent of all bankruptcies were due to medical bills based on interviews with people who filed for bankruptcy between January and April 2007. Medical expenses included mortgaging a home to pay the medical costs, losing at least two weeks work because of an illness, and medical bills of more than $1,000.
- A 2011 study found that “out-of-pocket medical costs” caused about one in four bankruptcies – among low income debtors.
- The NerdWallet Health study found that about 57.1% of bankruptcies were medical related.
- A Kaiser Family Foundation study in 2015 found that many people admit that paying medical bills means sacrifice. Many say they cut down on payments for food, clothing, vacations, seeing their doctors, taking their medications, and other sacrifices. The Kaiser study found that, on average, people pay 26% of the income (outside of their mortgage or rent) for medical expenses.
- Another study in 2017 by debt.org found that people 55 and older were filing more bankruptcies and that “the average 65-year-old couple faces $275,000 in medical bills throughout retirement.”
It can be hard to determine exact numbers because people who file for bankruptcy don’t have to state their reason for filing. There are different definitions of medical debt. Many people who have high medical expenses also have other types of debt too.
For more information, you can read some of the advantages to filing medical bankruptcy and how an attorney can help you through the process.
Eliminating Medical Debts
Generally, patients can eliminate the medical bills that are not covered by their insurance in a Chapter 7 bankruptcy. They can also make payment arrangements for any arrears in a Chapter 13 bankruptcy.
One practical factor to consider is whether you will have the need to go back to your doctor again after the bankruptcy is discharged. Some doctors may not want to treat you if you don’t pay their medical bill. Generally, hospitals that get funding through the government can’t refuse to continue to treat you if you fail to pay past due bills.
It is important to remember that you will need to make payment arrangements with any health providers you see after your bankruptcy discharge.
Types of Health Insurance
The main types of insurance coverage in America are:
- The Affordable Care Act. This law has helped many people who couldn’t afford insurance obtain insurance. The Act generally offers different types of plans depending on how much the debtor can afford to pay the premiums. One huge advantage of the Affordable Care Act is that patients with pre-existing conditions such as heart disease, cancer, diabetes, or other diseases and disorders are now eligible for coverage.
Still, the Affordable Care Act doesn’t cover many things:
- The deductible: Even with insurance, most people with ACA coverage must pay a certain amount out of their own pocket before the insurance company is required to pay anything. A typical ACA deductible is $6,000. Deductibles may be higher.
- Co-pays: Most plans require that the debtor pay a specific fee or a percentage of the bill out of their own pocket. The amount of co-pays is usually capped – that is, it usually can’t be more than a specific total for the year. Still, the co-pays can be expensive and a contributing factor to the need to file for bankruptcy
- Not every treatment is covered: Debtors should check with their insurance carrier as well as their doctor before they begin any course of treatment so they know whether the bills will be paid.
- Traditional coverage: Many people don’t use the ACA. Instead they either have medical coverage through their employer, a group plan, or they buy their own coverage. Like the ACA, these coverages all have deductibles, co-pays, and some treatments that won’t be covered. Pre-existing conditions may not be covered in these traditional policies.
- This coverage is primarily available to people who are 65 years-old and older: It generally covers 80% of your medical expenses. Seniors should consider buying supplemental coverage to cover the other 20%. Even with supplemental coverage; there are deductibles and co-pays – though they should be much lower than other insurance coverage. While most treatments are covered, there still may be some treatments that aren’t covered
- This is basically insurance coverage for low-income people: As with other insurances; there are some medical expenses that aren’t covered.
- Auto insurance: If you’re hurt in a car crash, the liability insurance for the person that caused your injuries may pay some of your medical expenses.
- Drug costs: There are many different types of drug plans depending on what type of basic health insurance you have. Drug costs can add up quickly because many people who take medications need to take them for the rest of their lives.
Countries like Canada offer universal coverage which pays for an array of many bills that American coverage does not.
Learn How Bankruptcy and Other Options Can Help Address Medical Debts
At The Law Offices of Ronald I. Chorches, we help debtors understand what solutions they can use and which ones offer the most benefit. We provide a free and confidential bankruptcy consultation to all new clients. Our offices are located in Wethersfield and Winsted Connecticut, and we’re easily reachable from the cities of Hartford, West Hartford, East Hartford and Manchester.
March 19, 2017
This article explains the top 7 strategies you can use to reduce the stress of your debts and getting your debts under control. As a bankruptcy law firm in Hartford, our primary goal it to get you completely out of debt, and at the same time provide tips that will make the process easier for you.
The Side Effects of Being Debt
Debt is considered one of the biggest life-events that causes stress. What this means is that those who know they have debts hanging over their head always have their debts as a reminder lingering in their day to day thoughts. Living with this daily reminder is not a healthy way to live, and can unnecessarily take your focus off the important things in your life. Being in debt can negatively affect your sleeping habits, cause marriage issues, hinder you from getting good credit and virtually put your whole life on stand-still while you’re continually living check-to-check and not being able to save your money.
Below is a summary of our top 7 debt stress reduction tips:
- Spend Money on What You Need
- Don’t Spend Money You Don’t Have
- Put Away a Few Bucks a Month for Savings
- Prioritize Your Debts
- Consider Getting Credit Counseling
- Ask For a Lower Interest Rate
- Consider Selling Things You Don’t Need
1. Spend Money on What You Need
One major way to get your debts under control is by purchasing only things that you need. When you’re in major debt it’s certainly not advisable to go on expensive vacations or buy a new car. This goes with the small things too. For instance if you don’t really need new socks or pants, don’t buy them. If you can wait until your debts are better controlled or even gone, then wait. You’ll be happy you made these small sacrifices instead of living in debt for years and years to come.
2. Don’t Spend Money You Don’t Have
This is a clear-cut suggestion to completely stay away from using credit cards while you’re in debt unless you are in dire-straits or an emergency situation. Credit cards have fees and interest costs and using them will only increase the amount of money you have to pay on your debts at the end of the month. The long story short is that when you’re in debt, and paying your debt off monthly, you don’t want to add more debt to your plate. In the end this form of sacrifice will pay off and reflect better on your credit report.
3. Put Away a Few Bucks a Month for Savings
If you’re following the advice in the two points above, you’ll actually find that you’re about to save a lot more money a month that you were able to in the past. After about 6 months of putting away a few bucks a month into your saving account, you’ll feel a whole lot better about your financial situation, and you’ll feel proud that you’re able to responsibly build up your savings account. Remember it doesn’t matter if you’re putting away 10 dollars or 50 dollars, as long you’re putting something away you’ll feel like you’re actually accomplishing something which will positively affect your bottom line. That feeling will substantially reduce the stress of your debts.
4. Prioritize Your Debts
This debt reduction strategy is the easiest but it takes a little bit of organization. Get a pen and a piece of paper out. Write down all your debts from top to the bottom of the page, and most importantly in order of importance. Obviously a vehicle debt will be more important than a debt to your cable company, and a credit card debt could be more important than the debt to your dentist. In any case the first step is to prioritize your debts into a list and then create a second column.
In the second column beside each debt item, list the amount you’re willing to or able to pay each month. At the end of each month (or which ever day you pay off your debts) start with the top-most debt and pay down your list.
Approaching paying your debts through prioritization enables you to get your important debts paid off as quickly as possible and leaves you with room to put off paying some less important debts during months that you don’t have enough income. Once the more important debts are completely paid, you’ll have money left over to pay the smaller debts, and even put some of your money into your savings account if you like.
5. Consider Getting Credit Counseling
One of the most effective ways of learning how to reduce the stresses associated with debt is through credit counseling. Credit counseling will provide you with all the tools you need to manage your income and expenses, and the strategies are presented to you in simple but highly effective terms. It can also be one of the best ways to help you avoid bankruptcy as long as you put the strategies to use.
6. Ask For a Lower Interest Rate
Now that you’ve prioritized your debts as explained above in point 4, you can actually take a swing at contacting your creditors and asking for a lower interest rate, or even ask them to reduce your debt. Contrary to popular belief, creditors are always mean people and if you explain to them that you’re eagerly trying to get out of debt and would like to pay off the debt you owe them as quickly as possible, they may accept your request at lowing your debt or interest rate if you promise to pay it off quicker. You can work with the creditor to find terms that work for both of you but your objective is to lower the debt or its interest and getting it paid off as quickly as possible.
7. Consider Selling Things You Don’t Need
Another great way of reducing your debts and/or saving extra cash to put down on your debts or put away is by selling off items in your home that you don’t need anymore. You may have some antique items that would sell for a pretty penny, or just a bunch of things in your basement or attic that you simple don’t use anymore. All you need to do is take an inventory of those items, take a picture and post it on a site like Kijiji which will enable you to find buyers completely free of charge.
You can start by selling only 10 items and after you’ve sold those things off and have reaped the benefits, you can start another sell off of other items you don’t need anymore. Remember that once you start getting paid don’t get too exited except for the fact that you’ll be able to put that money towards paying off a debt that’s been bother you.
Bonus: Consider Bankruptcy
There sometimes comes a time when a person’s debts are too much, and filing bankruptcy is the only way to get it under control. If you feel this is the position you’re in, there’s no better time than the present to consider bringing your case to a bankruptcy lawyer and figure out what your legal options are. Contrary to popular belief, declaring bankruptcy is not a negative, but instead it’s a useful tool available to those who wish to remove their massive debts legally.
The Take Home
The point of this article is two-fold. One is to show you that being in debt doesn’t have to always be stressful, and that getting your debts under control is actually not that difficult. As long as you approach your debts with a positive outlook and take some of the points laid out in this article into consideration, you’re bound to be on your way to financial freedom in a shorter period of time than if you had let your debts overwhelm you. The choice is yours.
March 19, 2017
The loss of a job can bring a variety of challenges and stresses. Of course, after losing a job your primary concern is getting back into the workforce as soon as possible. But in the meantime, you will likely need to take some proactive steps to minimize your debt until things turn around for you. Read the following article which provides great tips on debt management, and help you discover ways of paying down debts after job loss.
Make An Assessment of Your Current Finances
For example, one of the first things you can do is fully assess your current finances. You can look closely at all of your expenses and begin to trim those which are not necessities. In other cases, you can actively seek to reduce the costs of certain services, such as your cell phone by switching to a cheaper plan, or finding more competitive auto insurance.
While on their own, each individual cut may not seem like much at all but taken all together you could see some meaningful savings. If you save 5 dollars on 5 services, that’s $25 per month, or $300 a year.
If you find certain perks that are costing you monthly, getting rid of them can help you save enough money which you could be put towards your current debt until you find another job.
Take Advantage of Unemployment Benefits
Don’t be afraid to take advantage of the unemployment benefits to which you are entitled. But be sure you get in touch with the unemployment office as soon as possible because it takes time to get your claim processed. Obtaining monthly unemployment benefits will be one income stream that will help you stay above water and depending on the amount you are entitled to receive you can continue putting money down towards your debt.
In a best-case scenario, you will be able to ride out the storm and start to chop down your debt when you are once again employed. However, if the amount you owe your creditors becomes insurmountable, you can file for bankruptcy which will help you develop an effective debt relief program so you can get a fresh financial start.
Seek and Research the Right Financial Advice
Debt is stressful, it can impact all areas of your life and it often feels overwhelming especially if you lose your job. It’s important to know what to do about the debt and to understand how you can prevent future financial problems.
Below are a few different pieces of advice that may help:
1. Learn to Budget
The biggest thing that many people overlook is the important act of creating a budget. You’ll be shocked to find out how much you “accidentally” spend on a monthly basis especially if you’ve audited your spending habits.
2. Cut back on what you don’t need
There are plenty of frivolous ways that people spend money – many of which have far less expensive alternatives. For example, maybe you spend $3 per day grabbing a coffee on the way to work, when you could brew it at home for just a few cents per day. You can also seek cheaper gas. There are many websites and apps to let you know which gas station in your area that provides the cheapest gas. Over a period of a year, you’ll realize that all the little things add up and that saving those pennies really can make a difference.
3. Identify expensive debts
How expensive your debt is depends, to a large degree, on the interest rates. It’s often wise to pick those high-interest debts to eliminate first, since they’re adding the most new debt every month. Tackling your largest debts and getting them under control first is a great feeling and tends to make your other lesser debts appear meaningless or much easier to pay off – and they are!
4. Be honest with your spouse
If you’re married, don’t lie about your financial situation or try to hide the issues. Be open and transparent. Have that uncomfortable conversation. This way, you can both make changes and work together to find a solution.
5. Be careful with your credit cards
One tip is to keep careful track of your income and your expenses. Credit cards should not be used casually, as though they are an infinite source of spending money. They are not. When credit cards are used casually, without tracking income and expenses, the balances due increase, and with them, the interest that you have to pay.
6. Research your options
Above all else, be sure you understand all of your legal options for debt relief. In some cases, this could even include bankruptcy, which can provide you with a fresh start, and in other cases you can highly benefit from debt consolidation or debt settlement services.
These are just a few ideas that can help you stave off debt as you search for that new job but if you were already carrying debt prior to becoming unemployed, it is very easy to fall into true financial hardship. This is why when job loss occurs you need to really clamp down and spend the next few months doing everything you can to fix your financial situation. Do not ignore the position that you’re in because if you do it’s only going to get worse, and eventually come back to haunt you. You know this.
7. Speak with a bankruptcy attorney
If you’re debts are beyond manageable, it’s advised that you seek a free consultation from a bankruptcy attorney. Many people that have experienced debt, and have decided to seek the services of an attorney, have found that they were finally able to start saving money after bankruptcy. Remember, if you file bankruptcy, consider getting a secured credit card to increase your credit score after bankruptcy.
Practice Budgeting & Financial Planning
Most people experience debt problems of some kind within their lifetime. Correspondingly, most people can gain value from good debt management practices.
It may seem time-consuming, but it is best to write down all of your expenses and all of your income in a ledger, along with the amount of interest that you need to pay. That way, you will always know how much you have and what you can afford to pay for. Both amounts may be less than you would like, but at least they’ll be realistic.
Additionally, you’ll want to put together a budget. First, list your income from all sources for each month. After that, list your necessary expenses, like your home, utilities, groceries and health care.
Once you’ve done that, you’ll be able to look at what is left of your income for each month and determine how much you want to save and how much you will spend on unnecessary items, like entertainment. When planning to do some spending with a credit card, you’ll also need to figure out how much interest you’ll be paying and include that in your budget.
You’ll also want to include payment of debts in your budget. Some people like to pay off the highest-interest debt first, because that is the one that will keep draining your resources the most until it is paid off. Others may choose to pay off a small debt first, perhaps one associated with a necessary service like phone or internet services.
Once you decide on an approach, stick with it, and enjoy seeing your debt get smaller and smaller as you pay it off.
Most consumers may run into credit problems from time to time, whether due to excessive spending or insufficient earning. When that happens, it is important for the consumers to know how long they will be adversely affected by those credit problems and the debt management strategies they can avail themselves of.
Try to Pay Off Debts Quickly
If you miss a payment that you owe, and are 30 days or more late, that is a delinquency and can be added to your credit record. It is good to avoid delinquencies in the first place by keeping track of when your bills are due and paying them early; however, if you do have a delinquency, the best thing to do is to pay it immediately. You may be able to get the company to which you owe the money to drop their late fee in return for you paying as soon as you agree to do so.
Use 30 Percent or Less of Your Credit Limit
High credit utilization – using a high percentage of your credit limit – can also be a negative on your credit record. For that reason, it is best to only use 30 percent or less of your credit limit. If you use too much though, and then pay down your balance, the problem should be overwritten a month later since balance updates are sent to the major credit card bureaus by credit card issuers each month.
Account charge-offs, however, will be on your credit report for seven years. Account charge-offs happen when you fail to pay your debt to the person or entity to which it is owed in accordance with the agreement that you made with them. You can pay of that debt in full, or negotiate a settlement, which will preclude the risk of being sued for the money.
Create an Emergency Fund
When it comes to job loss, not having an emergency fund that has enough cash in it to cover all of your living expenses for six to 12 months, could damage your finances enough to put you into a financial whirlwind. Therefore, if your job is less than 100 percent secure, cut unnecessary expenses and start saving everything you can until you have that six- to 12-month reserve fund. Not making that happen is a bigger risk than anyone should be willing to take.
Your financial planning should also involve saving as much money as you can. Putting a regular amount into a savings account every time that you get paid is one of the simplest things that you can do and also one of the wisest. Doing your taxes early is good idea too, so you will know how much you have to pay, how much you can save, and how much you can spend.
In a related challenge, which is another good reason to save as much money as you can every month, is that even if you keep your job, you may find yourself with less work hours and thus with less work income. This happens to people all the time when companies find themselves with less revenue and immediately look at what labor hours they can cut.
Employees that do great work can make a case for keeping all of their hours, at the expense of employees who don’t do great work, but often cuts hit everybody so again it’s wise to always be prepared for them.
Don’t Continue to Run Up Debt
After losing a job it’s highly advised not to continue running up your debts. Some, like those associated with unexpected medical expenses, may be unavoidable, but others however, like credit card bills, are very avoidable so consider using a debit card instead and only spending what you actually have, with even that being very carefully budgeted.
Reduce the Chance of Identity Theft
It’s wise to determine how susceptible you are to identity theft. In 2017, one of the largest credit bureaus in the country, Equifax, was hacked into which exposed the private personal information of up to 145 million Americans to criminals. Some Americans froze their credit because of that. Others, however, did not.
Those who did not may have presumed that if they didn’t experience any apparent problems from identity theft right away, that they wouldn’t experience any later either. However, they may find out the hard way that they are wrong.
A good rule is that if you believe that there is any possibility that you may be a victim of identity theft, you should take every possible measure to protect yourself right away. A part of that task is checking your credit report for suspicious or incorrect information. Another thing you can do is to change any insecure passwords you may have.
The Take Home
When it comes to job loss and being in debt, it’s not the end of the world, but If you find that your debt is simply too overwhelming to handle, bankruptcy might be your best option. A bankruptcy attorney can provide you with additional information and help you determine if this is the right choice for your financial situation to do everything you can to stay afloat but if it becomes to hard, find a trust bankruptcy lawyer in your area and get the help you need from them.