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As discussed in previous posts, one of the main reasons why people often seek the fresh financial start offered by either Chapter 7 bankruptcy or Chapter 13 bankruptcy is the accumulation of significant medical debt — typically caused by the onset of a sudden injury/illness or a debilitating disease/condition.

In fact, a recent study conducted by non-profit organizations The Access Project and Demos determined that a high percentage of Americans — up to 29 percent — had some type of medical expenses as part of their credit card balance.

• On average, households with medical debt had credit card balances that were 46 percent higher than households without medical debt
• Both uninsured and insured households with medical debt had relatively high credit card balances ($14,512 and $10,973, respectively)
• Young adults (age 18 to 34) with medical debt were determined to be the age group with the highest average credit card debt, coming in at $13,303 (as compared with $7,450 for young adults without medical debt)
• Households with medical debt were more likely to be contacted by debt collection agencies than those households without medical debt

The researchers arrived at these eye-opening conclusions via a telephone survey of 1,150 lower- and middle-income households conducted back in 2005.

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Chapter 13 is a repayment bankruptcy. You pay your creditors whatever you can afford over three to five years (three years for lower income earners, five years for higher wage earners). You are required to commit your disposable income to the repayment plan during the repayment period. You are also required to pay as much to unsecured creditors as they would receive in a Chapter 7 liquidation bankruptcy.

An expected income tax refund is property of the bankruptcy estate. Many debtors are able to protect all or a portion of their income tax refunds by applying legal exemptions to the expected refund. After applying all of your available exemptions, the remaining unprotected amount is often little or nothing.

If you cannot protect your tax refund with exemptions, you are required to pay the non-exempt amount in your monthly plan payments.

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Tags: Bankruptcy, Chapter 13

Anyone who has completed a Chapter 7 or Chapter 13 bankruptcy knows how increasing expenses can create a financial crisis, which could eventually lead to the necessity of seeking bankruptcy protection.  But just like all those “little things” can predictably add up to a debt crisis, there can be many “little things” that add up to big savings each month if you know where to save.  Here are a few to consider:

• Is your “free checking account” one that only used to be FREE? Economic times change and these days it is more likely that your bank charges a monthly fee for what used to be a FREE checking account.  If you need to keep a large minimum balance on the account to avoid service fees, then you might want to consider other local banks or online banks with lower or no minimum deposit requirements.
• Credit card balance transfer fees can cost. At some point

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Tags: 13 Bankruptcy, Bankruptcy, Chapter 13, Chapter 13 Bankruptcy