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Durham Bankruptcy Law Blog

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.

Women more likely to suffer from unexpected medical costs

Health care is an expense that is extremely important and worrisome for many people in North Carolina. Medical emergencies can happen at any time and having insurance is no guarantee that you will not end up owing money after all is said and done. At Wootton & Wootton, P.C., we understand how stressful it is when you owe money that you cannot afford to pay.

A new study has found that when women are faced with unexpected medical bills, their finances take a harder hit compared to men, according to Slate. That conclusion was reached after examining credit and bank accounts of 210,000 people. While banks and credit lenders are prevented from asking customers about their gender or marital status, many use mathematical formulas to speculate a person’s gender.

Some fear auto loans may be the next subprime crisis

After the Great Recession, which many people think was caused in part by subprime mortgage lending, buying a home became more difficult for many people in North Carolina. However, auto loans continued to be readily available and it appears that large numbers of people took advantage of this. In fact, according to CNNMoney, the number of auto loans is currently outpacing the number of home loans across the country.

In total, 107 million people, or 43 percent of adults, have debt from purchasing a car. The problem is that 6 million of those people are behind on their payments and in danger of having their vehicle repossessed. It is thought that some of the people who took out these car loans did not fully understand the terms of the deals they were getting and ended up with more car than they could afford.

Debt relief companies punished after scamming customers

When people in Durham are facing large debts, it can be very tempting to look for an easy way to make the problem go away. While there are many legitimate companies that help consumers handle their debts, there are also some who advertise heavily yet provide little or no benefit to those who need financial assistance.

A recent court order has put a stop to the practices of 11 such companies. Some agencies help consumers by consolidating their debts into manageable monthly payments. However, others instruct customers to submit monthly payments to the debt settlement company rather than directly to the person’s creditors. The company then holds onto the funds while a settlement is negotiated with the creditor, often for less than the full amount owed.

Why medical debt is unlike other kinds of debt

Receiving a bill in the mail for a medical treatment you received can be a source of dread for many people in Durham. Medical costs can vary wildly and even those with insurance may end up with heft balances. At Wootton & Wootton, P.C. we know how stressful it can be to get stuck with a bill that you cannot afford to pay.

Medical debt is unique in a few different ways. For one, medical issues are often time sensitive and therefore treatment is received first and bills are issued later, Forbes points out. Unlike when you buy something from a store or order from a restaurant, there is no set price for medical services and consumers are not advised of prices ahead of time.

Bankruptcy fraud is serious and comes with steep penalties

When a debtor files for bankruptcy in North Carolina, he or she is required under the law to report all assets. In a Chapter 7 bankruptcy, assets are liquidated and used to pay off outstanding debts. However, despite its illegality, some people may try to conceal certain assets in an effort to keep them.

In fact, according to the Legal Information Institute, 70 percent of bankruptcy fraud cases involve a debtor attempting to hide assets. Sometimes people transfer some of their assets to friends or family members. Other types of fraud can be in the form of bribery, submitting multiple bankruptcy filings at the same time or the filing of false forms. Bankruptcy fraud is a federal crime and the penalties associated with it are serious.

Number of bankruptcies down but medical costs still leading cause

Access to affordable medical care is vitally important to those living in North Carolina. Health care has been a hotly debated topic in the last several years. The Affordable Care Act led to a number of changes for people across the country. As MarketWatch points out, the ACA resulted in higher deductibles and increased premiums for many people, which translates to more money out of consumers’ pockets.

However, the ACA also led to a big increase in the number of people who are insured and it provided certain protections, such as for people with pre-existing conditions. It also led to decreased premiums for vulnerable populations, such as older people and low-income families. As a result, since the ACA was enacted, the number of people filing for personal bankruptcy in the U.S. has decreased. In 2010, 1.54 million people filed for bankruptcy. In 2016, that number dropped by approximately half to 770,846.

What is the best strategy for paying down credit card debt?

People in Durham use their credit cards for a wide variety of reasons. Maybe you needed to make a big purchase like a new appliance or you needed to repair your car. Perhaps your income was lacking and you used it for everyday purchases. Credit card balances can grow very quickly and the thought of paying them off can be overwhelming. Here are to strategies to consider when deciding how to approach paying down your credit card debt.

One approach is known as the avalanche method. According to CNBC, this is where you pay off your debt with the highest interest rate first. This will save you money in the long run since you will pay less interest over time. Once that balance is paid off, you would move on to the next highest interest rate and continue on in that fashion until all your debt has been depleted.

Many people facing collections for medical debt that isn’t theirs

Being contacted by a debt collector in North Carolina can be very upsetting. Financial problems are a major source of stress for many people and collection agencies are not always friendly. Medical debt is quite common among people in the United States and is the source of many debt collection calls. However, a new study has found that many people do not actually owe the medical debts they are being contacted about.

According to the Penny Hoarder, it was found that 63 percent of complaints received by the Consumer Financial Protection Bureau regarding medical debt were from people who did not actually owe the debt they were contacted about. Many people were also upset about medical debt appearing on their credit report.

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