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Towson Maryland Bankruptcy Legal Blog

Most Americans don't have money to pay medical debts

According to a survey from Freedom Debt Relief, Maryland residents and other Americans may lack the ability to pay their medical bills. The survey found that only 45% of patients in the United States paid for medical expenses in cash in 2019. Of those who didn't use cash to pay down those balances, 42% put them on credit cards while another 19% borrowed money from family members or friends.

Medical bills are the most common reason why individuals file for bankruptcy. Therefore, it is a good idea to be proactive when it comes to paying for a trip to the doctor or to the emergency room. Individuals are encouraged to create an emergency fund large enough to cover their living expenses for at least three months. This may be done by getting a second job or cutting back on expenses. At a minimum, a person should save enough money to pay any deductible that he or she may owe.

Credit card debt is common among Americans with a high net worth

Maryland residents may be surprised to learn that credit card debt is more common among individuals with a net wort of at least $100,000 than it is amongst those with a negative net worth. After surveying 2,547 American adults, the financial services company Bankrate discovered that 57% of the respondents with assets worth between $100,000 and $200,000 carried balances on their credit cards. Only 40% of the respondents with a negative net worth said that they had credit card debt.

The researchers put this down to the ease with which affluent Americans can obtain credit and their lack of liquidity. Many of the survey respondents had a high net worth because of the value of their homes, but real estate holdings are not a source of spending power. Overall, more than half of the respondents with revolving debt balances said that they owed credit card companies $2,500 or more, and almost 40% of them reported having balances greater than $5,000. Paying everyday expenses was the most common reason given for credit card spending.

How to pay medical bills without credit cards

While household income has gone up for most in Maryland and throughout the United States, medical costs have gone up even faster. Therefore, many who seek treatment feel as if their only option is to put their medical expenses on a credit card. However, there are strategies that people may be able to use to avoid having to do so. For instance, it's possible to purchase an insurance policy or apply for Medicare.

Those who have a job could be eligible to be covered under an employer's plan. Those who don't have access to an affordable insurance policy are encouraged to talk to their medical service provider about a payment plan. Many providers will allow patients to make payments over a period of many months or years, and in some cases, these providers won't charge interest on an outstanding balance.

Filing for bankruptcy can help you avoid vehicle repossession

Having your own vehicle isn't a luxury. For many people, it is a basic necessity for modern life. Many companies, even those who don't require any kind of delivery service or driving as part of the job, inquire as to whether an applicant has their own transportation as part of the hiring process.

Even if your employer doesn't require a car, you only have to try to bring your groceries home on the bus once to understand how public transportation doesn't really fit all of the needs that a modern family has. Having a car allows you to transport yourself to important appointments, arrive at work on time and perform necessary chores and tasks for your family.

Strategies to reduce medical bills and avoid raiding retirement

Seeking emergency medical care in Maryland could lead to financial ruin, especially if the patient lacks health insurance. A professor of health policy and management has called the health care marketplace irrational and warns consumers that price gouging has become the standard approach to business. He strives to inform people about their rights and teach people that they have options for negotiating prices or accessing financial assistance.

The professor advises people to shop around for medical care whenever possible. Prices vary, and lower prices do not influence the quality of care. Different institutions might charge anywhere between $44,000 and $500,000 for the same heart surgery procedure. In emergency situations, consumers do not necessarily have to sign financial forms prior to receiving care. People can place statements like "did not read" or "not comfortable signing form" in signature lines to prevent making a contractual commitment to paying whatever a hospital chooses to charge.

Older Americans more likely to file for bankruptcy

An increasing number of people in Maryland and across the country are filing for bankruptcy after the age of 55. Since 1991, the numbers have increased dramatically as have bankruptcy filings for those 65 and older. Bankruptcy can provide an important path for debt relief when people are struggling under the weight of unrepayable debt, collector calls and a declining credit score. It can allow people to escape the burden of discharged debt although there can be serious repercussions for people's access to credit.

Between 1991 and 2016, there was a two-thirds jump in the number of people between 55 and 64 choosing to declare bankruptcy. For people over 65, that number more than doubled. While only 2% of people who filed for bankruptcy in 1991 were over 65, by 2019, that figure had reached 12%. Medical bills are one major factor leading older Americans to file for bankruptcy. Like credit card debts, personal loans, home loans and other debt, medical bills can be discharged in bankruptcy. Costly medical care can deplete people's savings, leaving them with little to help them respond to later needs.

Creditors have limits on collection activities

Being in debt often means receiving calls from creditors who want to collect the money owed to them. For those who don't have the money to pay their bills, this can be frustrating. Fortunately, there are laws that protect the people of Maryland from harassment by debt collectors. It's important for consumers to understand these laws so they can assert their rights.

Most debts have a statute of limitations of up to six years. This means that a creditor may not be able to get a judgment against a consumer after that time has elapsed. However, they can still try to collect the debt. It's also important to know that the statute of limitations typically starts when the last payment is made. A debt that has been outstanding for quite a long time could result in a judgment if a consumer makes a payment toward it.

Bankruptcy may help a person eliminate debt

Maryland residents have a couple of options to help them get out of debt. The first method is to ask a creditor to forgive a debt or put a debtor on an alternate payment plan. However, there is no guarantee that a creditor will agree to do either of these things. There is also a chance that an individual will have to pay taxes on any portion of a debt that is forgiven.

The other option that a debtor may have is to file for Chapter 7 bankruptcy. Filing for bankruptcy allows someone to reduce or eliminate a debt balance, which can make it easier to save money. It is possible for an individual to start rebuilding his or her credit as soon as a case has been resolved. By having debts discharged through bankruptcy, a borrower is likely to have a lower debt-to-income ratio.

How debt reorganization can solve financial issues

Those with overwhelming debts will understand the feeling of not knowing which debt to tackle first. When you know that you cannot afford to pay all of your debt repayment obligations, it becomes a matter of prioritization. But when you have a wide range of debts that are all subject to differing rates of interest, creating an effective debt repayment strategy can be very difficult to do.

This is why debt reorganization is such a great option for many debtors. It can help them to simplify their debts so that they feel less of a burden, but it can also help to minimize interest rates and reduce additional fines. One of the ways that debts can be reorganized is through Chapter 13 bankruptcy.

Eliminating student loan debt through bankruptcy

Maryland residents may be able to get relief from student loan debt by filing for bankruptcy. To do so, an individual would need to show that paying these loans constitutes an undue hardship. Most courts will look to the Brunner test to determine if a debtor is eligible to have student loan balances discharged. There are three criteria that need to be met for a person to pass the Brunner test.

First, an individual must show that he or she lacks the funds necessary to both make student loan payments and maintain a reasonable lifestyle. Second, it must be shown that this will be true for the duration of a student loan's term. Finally, a debtor must prove that there was a good faith effort made to repay the outstanding balance. It is important to note that there could be serious negative consequences to filing for bankruptcy even if a student loan debt is wiped away.

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