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Michael D. Hart, P.C.
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Roanoke Virginia Bankruptcy Law Blog

Conquering debt one step at a time

In Virginia, many older adults wonder if they will get out of debt before retirement. Some have spent numerous years accumulating debt. These individuals confront financial difficulties -- including the reality that they never had the chance to save any money -- by the time they retire. Unfortunately, debt usually begins early in adult life.

For example, college students often get into debt but are unable to pay back the borrowed funds. Higher interest rates on credit cards make it impossible for them to pay back their debts. Many people max out their credit cards because they do not have enough money to pay for their daily expenses. Moreover, these same individuals often possess several credit cards, and this results in owing thousands of dollars to lenders.

What are your rights if you are facing wage garnishment?

Several negative consequences come with owing a significant amount of debt. In addition to the stress you may feel when you realize that you cannot manage your payments any longer, you may also be getting phone calls from debt collectors and letters from creditors. At some point, you may get notice that a creditor initiated the wage garnishment process.

This process is a way through which a creditor can recoup payment for past-due debts. It means that you will see a deduction in your paycheck held back by your employer. This amount will go toward what you owe to the creditor. This can be frustrating, especially if you are already struggling financially. It is in your interests to know about your rights and find out what you can expect from this process

How to avoid bankruptcy because of medical debt

Virginia residents who accrue medical debt may find themselves in a tough financial position. According to one 2019 study, there could be as many as 530,000 Americans who have filed bankruptcy in the United States because of medical debt. The study itself found that 65.5% of the 910 respondents said that they filed for bankruptcy because of financial issues caused by a medical event. Bernie Sanders has cited the survey as part of his pitch to overhaul the American health care system.

When an individual gets hurt or sick, he or she may not be able to work. The lost income combined with the medical bills incurred may be what actually causes a person to file for protection from creditors. There are some ways that people can protect themselves financially before they experience a medical issue. For example, it may be possible to negotiate with a service provider to reduce or eliminate a balance owed.

Millennials are prone to medical debt that goes into collections

Millennials, individuals who were born from 1981 to 1996, are prone to medical debt that goes into collections. Virginia residents may be interested in learning about some factors that contribute to this and what millennials can do to cover their medical debt.

It is estimated that less than 20 percent of millennials are uninsured. The average income for Americans who are between the ages of 25 and 34 is about $36,000. This means that the average millennial has less earning power. The third reason why millennials may be more prone to medical debt that is in collections is because they tend to move frequently, which increases their chances for bills getting lost.

Taking the bankruptcy means test

Virginia consumers who are considering bankruptcy might wonder whether they should file for Chapter 7 or Chapter 13. Chapter 7 involves discharging all eligible debts while Chapter 13 involves creating a payment plan that allows the filer to keep some assets. In order to qualify for Chapter 7, it is necessary to pass a means test.

The first stage of the means test is simple. This checks whether the person makes less than the state median income. This is based on the last six months of income. The test also takes into account any significant decreases or increases in income. In 2013, 88% of people who took this test passed it. Those who do not pass this initial test but still want to file Chapter 7 and those who wish to file Chapter 13 must move on to the next stage. This is complex and involves gathering as much information as possible about the last six months of expenses. Allowable expenses include such costs as rent, food and clothing. What is left outside of allowable expenses is disposable income that can be used toward the debt.

Survey finds most Americans unprepared for medical expenses

Most Americans are unprepared to pay off medical debt, but there are steps people in Virginia can take to better insulate themselves against these types of costs. The first step is to build an emergency fund. This should be three months of expenses or at least the equivalent of the deductible for the person's health insurance. A health savings account can help with this.

It can be tough to save up the necessary money, but some people may be able to do so by reviewing their budget and finding places to cut back, such as avoiding eating out and spending less on entertainment. Some people might be able to get a second job.

Why it is difficult to discharge student loans in bankruptcy

People in Virginia who are struggling with student loan debt might be considering filing for bankruptcy. However, even though Americans have a cumulative student loan debt that is more than $1.5 trillion, most student loan obligations cannot be discharged in bankruptcy.

These borrowers do have other options, however. This is particularly true for those who have federal student loans, which may make them eligible for a repayment plan that is based on income. People carrying federal student loan debt may also be able to put payments on hold if they can qualify for forbearance or deferment. Private student loans may not offer these options, but lenders might still be willing to negotiate, and it is worth contacting them to find out.

Virginia residents and others spend tax refunds like this

You might be one of many Virginia residents who are eagerly awaiting the new year. Perhaps, you have already written a list of goals you'd like to aim for to improve your health, find a life partner or save more money. Maybe you're among those who are most excited about a new year because it means you'll soon be getting a tax refund. Do you start in December to decide how you'll spend the money?

The topic of income tax often incites debate. Many people believe it is unconstitutional. However, as it currently remains part of the federal government process, every year, around this time, people start trying to figure out how they'll spend their refunds. Those facing serious financial crisis may want to consider using tax refund money to pay off debt.

An overview of rules debt collectors must follow

Virginia residents who owe money to credit card companies, hospitals or other creditors may have their debts sold to collection agencies. Those agencies may then attempt to contact a debtor by mail or phone. While it is legal to apply pressure to debtors, they are not allowed to threaten or harass them. For instance, a debt collector cannot threaten to file a lawsuit unless there are legitimate plans to take a matter to court.

It is also illegal for someone trying to collect a debt to threaten to have a debtor taken into custody for nonpayment of a past due balance. Debt collectors may not call individuals before 8 a.m. or after 9 p.m. If an a debtor has hired an attorney, a debt collection agency must contact the attorney instead of the client. Individuals representing a debt collection company must refrain from using profane language when talking to an individual over the phone or by text message.

Three options for keeping medical debt off credit cards

When looking at the statistics, it seems that Virginia residents have more money to spend on purchases and savings. Since the year 2009, the median household income has gone up by 30%. While this rise in income has its benefits, medical costs are actually growing faster than income. They have gone up by 33%. Americans may wonder how they can avoid putting medical costs on their credit card since interest rates can be so high.

After a person has been hit with a medical bill that they cannot afford, they may want to ask if a payment plan is available through the doctor or hospital. Sometimes, health care providers will offer monthly payment plans that do not include fees or interest. It is good to understand the difference between payment plans and medical credit cards. Medical credit cards need to be paid in full by a certain date before the individual is charged interest.

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Michael D. Hart, P.C.
19 Church Street Southwest
Roanoke, VA 24011

Phone: 540-627-6520
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