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Emergency care and medical debt: Is it dischargeable in bankruptcy?

Medical bills can be astronomical. This is true whether the care involves out-patient care or more serious, emergency situations. This reality was recently discussed in a piece by the Associated Press.

The story involves a man that required urgent care. The only way to get the treatment he needed was to receive transportation through the use of an air ambulance transportation service.

Is the cost of ambulance transportation covered? Unfortunately, even if a patient has medical insurance not all the medical costs needed for care may be covered. As a result, the answer to this question depends on the language of your insurance policy and the details of the situation.

Mistakes in the insurance directory can cause massive debt

It is supposed to be a book of information designed to help those who need medical care find the right professional. Not only does it have a list of medical providers and their contact information, but the list is supposed to include those who are covered within your insurance.

The whole point is to eliminate the headache of finding a doctor covered by your plan, right? Well, maybe not.

Unfortunately, these directories are not always kept up to date. This can result in a patient seeking care from a physician who is not within his or her plan. Care outside of coverage can result in bills - big bills.

Are you eligible for Chapter 7 bankruptcy?

While you may have considered filing for Chapter 7 bankruptcy as a way to wipe out some of your extensive debt, not all people are eligible for this form of debt relief. At Ledford, Wu and Borges, LLC, we know that in order to qualify for this chapter of bankruptcy, Illinois debtors must meet certain criteria.  

According to U.S. Courts, you may be able to file for Chapter 7 bankruptcy if you meet the following conditions:

  •          You have not filed for bankruptcy within 180 days and had that bankruptcy thrown out because you did not show up to a court hearing or for any other reason.
  •          You have completed an approved credit counseling course within 180 days of filing for bankruptcy.
  •          You are not filing as a corporation or partnership.

Managing the high cost of bankruptcy

Bankruptcy is designed to help people, who have been overwhelmed by debt, manage their financial burdens. In some cases, debtors can emerge from bankruptcy with a clean financial slate. Some people, however, may be unable to afford the cost of bankruptcy itself. The truth is, filing for bankruptcy can be pricy, and the cost may deter people from starting bankruptcy proceedings. In addition to the fees and costs of filing the bankruptcy paperwork with the court, there are often attorney’s fees involved. In some cases, these fees can amount to thousands of dollars. This leaves many people wondering how they can come up with this money when they have no money to pay their debts in the first place.

Debtors have several options when it comes to accumulating the money needed to file for bankruptcy. Depending on which chapter of bankruptcy you are planning to file, you may want to stop making payments on your credit cards. Since you are attempting to discharge the debt, you can take the money that you would use for the monthly payments and put it toward obtaining an attorney. Keep in mind that once you file for bankruptcy, an automatic stay will keep creditors from harassing you with constant calls and correspondence.

What you should know about reaffirming debt

Filing for Chapter 7 bankruptcy can be a complicated and emotional process, especially when you are faced with decisions that may seem overwhelming. Although people who file for this type of bankruptcy are able to wipe out much of their debt, they run the risk of having some of their property and/or possessions reclaimed by a trustee who is appointed to the case.  There are ways, however, of keeping some of your property, such as your home or vehicles, through loan reaffirmation in Illinois.

Depending on the circumstances surrounding your case, you may be able to work with the creditor in order to extend the terms of your loan, even while you’re going through the bankruptcy process, according to U.S. Courts. When you reaffirm a debt, you agree to work with the creditor and continue making payments on your loan in order to keep your property. For example, if you wish to keep your vehicle during a bankruptcy, you may reaffirm the loan with the financial institution and make arrangements to keep paying, despite your impending bankruptcy. In some cases, the creditor may lower your monthly payments or decrease your interest rate as a way to help you.

How does Chapter 11 bankruptcy work?

Whether you have filed for Chapter 11 bankruptcy on your own merit or your creditors have submitted a petition for bankruptcy on your behalf, you may be wondering what the process entails. If you are going to file for bankruptcy in Illinois, you will need to submit several documents. This includes a list of all your assets and liabilities, your current income, a statement of financial affairs and any contracts and leases you may have. You must also take a credit counseling course before the bankruptcy will be considered.

As soon as your paperwork is filed, you will assume the title of debtor in possession, which allows you to maintain control of your business, assets and property during the bankruptcy process, according to the U.S. Courts. It also requires you to act as a trustee over your case, in reorganizing your debt so that you can repay your creditors. In most cases you will remain debtor in possession until the plan for repaying your debt has been approved or until your case for Chapter 11 bankruptcy is switched to a Chapter 7 or Chapter 13 bankruptcy. Although it is not common, your case may be turned over to a court-appointed trustee under certain circumstances. This may happen when the debtor in possession is found to be engaged in incompetence, fraud, gross mismanagement or dishonesty.

Garnishing wages in a Chapter 13 bankruptcy

If you are behind in making payments on your mortgage, vehicle loans, credit cards, medical expenses or other types of loans, you may have received phone calls, texts and/or emails from creditors. In an attempt to reclaim owed funds or replace missing payments, creditors may take action by garnishing your paycheck. While it may be impossible to retrieve the funds that have already been lost through wage garnishment in Illinois, filing for Chapter 13 bankruptcy may help to protect you from losing more money. At Ledford, Wu and Borges, LLC., we know that having your wages garnished can be overwhelming. You have options when it comes to unfreezing your bank account, having your wages garnished or filing for bankruptcy.

When a creditor garnishes a debtor’s wages, federal and state laws place a limit on how much money a creditor can take out of each paycheck. While federal law prohibits creditors from taking more than 25 percent of the debtor’s income, Illinois state law reduces that limit to 15 percent. The garnishments are taken out of the debtor’s paycheck after all other deductions have been made.

Prison debt may be discharged under certain conditions

In a Chapter 7 bankruptcy, people are able to discharge much of their debt and start fresh with a clean financial slate. There are some expenses, such as school debt and child support, that can not be wiped free from the list of owed debts. Other expenses that are not eligible for discharge include penalties and fines that are given by a criminal court of law. In some cases, however, certain situations in Illinois may be difficult to discern whether the debt is criminal in nature. One case showed how even though a debt is connected to a prison does not always mean that it is exempt from bankruptcy.   

One man in Minnesota was able to write off the cost of his room and boarding for his stay in prison. When the man filed for Chapter 7 bankruptcy, he listed his prison expenses under non-priority unsecured debt. The U.S. Bankruptcy Appellate Panel for the court determined that the debt could indeed be written off under liquidation bankruptcy as it met the requirements under the state code. The court ruled that in order to be exempt from discharge, the debt must be given to punish a person or be penal in nature. Prison room and boarding, on the other hand, did not fall under this category, as it was simply the prison’s attempt to get back some of the money used to house the prisoner.  

What consumers should do when hit with time-barred debt

Even when people believe that their finances may be in order, they may be contacted by a creditor trying to collect old debt. Since debt has a statute of limitations, creditors are unable to collect unpaid debt once a certain time period has passed. These ‘expired’ expenses are known as time-barred debt. Regardless of whether the person is actually still responsible for the debt, however, aggressive creditors may continue harassing debtors through phone calls, mail and even bad marks on their credit report.

Although it may seem overwhelming, there are a few things people should keep in mind when faced with this type of situation. First, people should refrain from making an installment payment in order to appease the creditor. The statute of limitations on the debt can restart when a payment is made, unless the debtor makes the full payment in one lump sum.

Understanding homeowners’ rights during the foreclosure process

There are a number of homeowners across the state of Illinois who may struggle to keep up on their mortgage payments. As a result, people may face foreclosure or lose their home when the lender decides to reclaim the property. Although homeowners who face foreclosure may be delinquent in making their house payments, they do have certain rights when it comes to the foreclosure process.

According to the Homeowner’s Rights Act, lenders are required to provide homeowners with sufficient notice of foreclosure, as well as a complete listing of their rights and legal options. Upon the homeowner’s request, lenders must provide a financial statement, including the amount of money the homeowner owes on his or her home. This allows homeowners to explore their legal options, such as putting their home up for sale or refinancing their loan, which they are able to do throughout the redemption period. People should understand that they are able to contact the mortgage company in order to talk about different alternatives to foreclosure, and to find out what they can do to avoid losing their home.

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