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Towson Maryland Bankruptcy Legal Blog

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.

Bankruptcy and credit scores

Lots of Maryland residents struggle with debt. While many realize that bankruptcy is an option, some are reluctant to pursue this for fear that it will cause further damage to their credit scores.

While Chapter 7 bankruptcies can stay on a credit report for up to 10 years, Chapter 13 bankruptcies may appear on a credit report for as little as seven years. However, businesses and individuals who review credit reports are often more concerned about recent credit history than old information. If a person has established a strong credit history since the bankruptcy, someone reviewing their credit report may give much greater weight to recent positive entries.

New law protects disabled veterans in bankruptcy

For military veterans in Maryland, the transition to civilian life can be difficult, especially on a financial level. This is particularly true for disabled veterans who must rely on military benefits to support their life. Medical bills and personal expenses can leave people feeling trapped amid skyrocketing debt. Indeed, the numbers bear this out. Across the country, 15% of all filers for both Chapter 7 and Chapter 13 personal bankruptcy are service veterans. This is disproportionate to veterans' share of the overall population, which sits at 10%. In 2017 alone, over 125,000 veterans filed for bankruptcy across the country.

In the past, veterans' disability benefits received no particular protection under bankruptcy law, unlike Social Security Disability benefits. These benefits, issued by the Department of Veterans Affairs or the Department of Defense, could be used to determine the disposable income of the individual filing for bankruptcy. This meant that these benefits were potentially exposed to creditors. In order to file for Chapter 7 bankruptcy, people must fall below a certain income threshold. For Chapter 13 bankruptcy, the filer's disposable income is used to determine a payment plan that can persist for years. Therefore, disabled veterans were at a particular disadvantage, even compared to other people receiving different types of disability benefits.

Bankruptcy rate increasing drastically among seniors

The number of seniors who are filing bankruptcy in Maryland and across the country has been rising starkly in recent years. In most of the cases, the seniors filing for bankruptcy protection made less money than the population at large. Among senior households that filed for bankruptcy during the year 2016, 78% had less than the median annual income. In that year, bankruptcy filings by people 65 years old or older accounted for 12% of the total filings; that figure in 1991 was only 2%.

There are a number of factors that have led to the increase in bankruptcy filings by older Americans. Wages have remained steady despite increases due to inflation, unions have lost power, and pension plans are less reliable. The rise in the cost of medical care, too, has significantly impacted the financial standing of older Americans, who need health care more often than their younger counterparts. Another major factor is the increase in financial predators, who market credit cards and other debt instruments to seniors even after they've just filed bankruptcy.

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