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Durham Bankruptcy Law Blog

Many North Carolina residents may qualify for Chapter 13

Deciding to take a serious approach to handling personal debt is a major decision. North Carolina residents who are looking to take action may feel a well-deserved sense of accomplishment as choosing to take on such an endeavor can set parties on a path toward financial freedom. For some, Chapter 13 bankruptcy may offer the most interest when exploring options.

Chapter 13 bankruptcy essentially involves reorganizing a person's debt in order for him or her to repay the outstanding balances over time. Typically, the process lasts between three to five years. In order to qualify for this relief avenue, individuals must meet certain income and debt requirements. Too little income or too much debt may disqualify parties from following this particular path.

Debt relief scams may leave North Carolina debtors worse off

Many North Carolina residents hope to find the best way to handle their outstanding debt. The idea of facing considerable balances can often lead to stress and anxiety, and for some, getting debt relief help may seem too good to be true. Unfortunately, some companies who claim to help debtors get out from under their liabilities only work to make matters worse.

It was recently reported that 15,000 people in the United States were affected by a relief scheme operated from another state. The scam utilized telemarketing techniques that informed individuals that the company could help consolidate and settle outstanding debts for a monthly fee. Some parties took this offer in hopes of managing their debt, but they ended up paying hundreds and thousands of dollars for no help at all.

Dodging debt may not outweigh personal bankruptcy as relief route

The topic of debt is often a touchy subject for many North Carolina residents. Debt issues are often associated with a negative stigma, and many people may even be hesitant to seek help with their financial problems due to fear of being perceived as irresponsible with money. However, ignoring financial problems may only make the situation worse, and individuals may do better to consider their debt-related questions and potentially look into personal bankruptcy.

One method that many people often consider when it comes to addressing their outstanding liabilities is to simply not address them at all. It is not unusual for parties to think that if they dodge creditors long enough then the debt will go away. While certain marks on a credit report may go away after some time, it takes several years for such an occurrence, and the debt itself does not disappear.

Changes to medical debt and credit reports may affect patients

Needing medical attention is often unavoidable in certain situations. Unfortunately, many North Carolina residents may consider forgoing treatment due to the high costs of certain procedures. Often, individuals accrue considerable amounts of outstanding medical debt and find it difficult to address the balances effectively. As a result, their credit scores and other financial affairs may suffer.

Some parties may find it interesting to learn that new rules regarding medical debt and credit reports will soon go into effect nationwide. Reports stated that there will be a 180-day period before outstanding medical debt gets recorded on patients credit reports. Before this blanket rule was in place, some offices would give patients anywhere from 30 to 180 days before placing their bills into collections.

How does personal bankruptcy impact a 401(k) plan?

When saddled with overwhelming debt, a North Carolina resident will likely consider his or her options for relief. One of the options he or she may consider is filing for bankruptcy. While many people consider this debt relief process as less than ideal, it can help individuals get their financial affairs back on track and have a more positive financial future. Of course, personal bankruptcy can have considerable impacts on one's finances and credit record, and parties may have concerns when it comes to their 401(k) plans.

Fortunately, during bankruptcy proceedings, funds in a 401(k) retirement account typically remain out of reach from creditors. Federal protections work to ensure that such assets do not fall into disarray in times of financial difficulty. The Employee Retirement Income Security Act is the main law that allows retirement funds to remain as secure as possible, though the exact measure of security can depend on specific conditions.

Middle-class families increasingly the ones burdened by debt

When many people think of those who end up filing for bankruptcy or seeking other types of relief from debt, they imagine that it is only those who live in poverty or are unemployed that have such troubles. However, those with moderate incomes are increasingly feeling the financial burden caused by debt, for a few different reasons.

One major one is the fact that many families do not have any type of emergency savings. When a cost occurs unexpectedly, they are forced to take on debt in order to get by. According to the Atlantic, even a cost as small as $400 would be uncoverable for 44 percent of people who earn between $40,000 and $100,000 per year. So, while people may have many possessions, they do not have much or any saved as a cushion in the case of an emergency.

Wiping out medical debt draws support from diverse groups

Dealing with a medical issue in Durham can be extremely stressful. However, after receiving treatment, many people also end up with bills that they cannot afford to pay. That is why some groups are working to combat this growing issue, which affects millions of households across the country.

In fact, according to TechCrunch, 43 percent of people in the U.S. have medical debt that they cannot afford to pay. One company aiming to combat this problem is a tech startup that plans to use its proceeds to purchase people’s medical debt and then forgive the outstanding amounts. Because debts often get sold to collection agencies, the company will actually be able to purchase the debt for much less than it is actually worth.

A look at the link between health care costs and financial woes

Health care is an issue that is extremely important to people in Durham and throughout the United States. It is also an issue that is currently in the spotlight as attempts are being made to undo some or all of the regulations stemming from the Affordable Care Act.

According to Money Magazine, the bill currently being considered and negotiated in the Senate would only provide subsidies for insurance costs to those with very low incomes, leaving some who currently qualify without aid. In addition, the bill in its current form would undo expansions to Medicaid, which 74 million people rely on today, many of whom are seniors and children.

Is bankruptcy right for me?

If you are struggling to pay your debts and barely making ends meet in North Carolina, you may be feeling stressed out about your financial situation. You may also be considering if you should file for bankruptcy to put an end to the harassing creditor phone calls and endless bills you are receiving. Even though bankruptcy may seem like a cure-all for your financial troubles, it can have some serious ramifications for your situation. 

Here are some key considerations you should keep in mind. 

Preparing to file for Chapter 13 bankruptcy

For people from diverse backgrounds, there are times when bankruptcy becomes necessary. If you are considering bankruptcy, it is vital to closely review any of your choices and ensure that you have found the smartest direction forward. In Durham, and all other parts of North Carolina, some people may choose to file for Chapter 13 bankruptcy. At Wootton & Wootton, our law firm is very familiar with the different reasons people may decide to take this route.

There are a number of reasons why Chapter 13 is often advantageous, from offering reasonable repayment plans to allowing those who file to retain a large number of their assets. If you are sure that this is the best course of action given your financial situation, you should take a methodical approach and familiarize yourself with the process beforehand. In fact, even if you are not sure whether or not this option is ideal, it may be a wise decision to take a look at the ins and outs of the Chapter 13 process.

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