Durham Bankruptcy Law Blog

It's true that your life after bankruptcy may be different than it was beforehand. Bankruptcy generally reduces your credit score and can make it harder to get credit in the future, at least for a short time.

The fear of what might happen after bankruptcy isn't a good reason to avoid using it when you need it, though. Bankruptcy can free up your finances and make it easier for you to go without the need for credit cards. With better stability, you may not even miss the credit lines you once had.

North Carolina residents who watched the Jan. 14 Democratic presidential debate may have heard Senator Bernie Sanders say that about 500,000 Americans file for bankruptcy each year because of medical debt. Sanders based his claim on the results of a recent survey of 910 personal bankruptcy cases conducted by the Consumer Bankruptcy Project. The advocacy group concluded that more than 65% of the people who file a Chapter 7 or Chapter 13 bankruptcy each year do so because they have medical bills they cannot pay or found themselves in an unmanageable financial situation after an illness or injury.

The CBP study suggests that the Affordable Care Act has done little to address the issue of medical debt in the United States as all of the bankruptcies studied were filed after the landmark law's passage. A previous study conducted by the group before the ACA was signed into law by President Obama linked roughly the same percentage of bankruptcies to medical debt. Senator Elizabeth Warren, who is one of the candidates running against Sanders for the Democratic presidential nomination, contributed to that study.

When most people think of bankruptcy, they often think of someone having all of their assets repossessed, including their home. While that is what happens with chapter 7 bankruptcy, there are other forms of bankruptcy. North Carolina residents may be interested in learning about chapter 13 bankruptcy, which basically allows a person to pay back their debt while holding onto their assets.

If an individual files chapter 13 bankruptcy, there will likely be some stipulations. Most individuals are required to attend credit counseling. The counselor will work with the individual who is filing for bankruptcy and will help them create a repayment plan that is reasonable for their budget.

Many North Carolina residents are benefiting from rising income rates. While the national median household income has gone up over the last decade, by 30%, medical costs are rising too. Since the year 2009, they have gone up by 33%. Here are a few steps individuals can take to prevent credit card debt after a health scare or hospital visit.

Hospitals and private practices may offer monthly payments that are without interest or fees. A payment plan may be arranged through the provider. This option is not the same as getting a medical credit card. When a person has a medical credit card, they usually do not have to pay interest to the issuer for at least a year. However, they can be hit with serious fees if they do not pay it off by that time.