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Recent Blog Posts
Pandemic Relief Payments Still Excluded from Chapter 13 Calculations
The recent CARES Act deadline for excluding pandemic relief payments from Chapter 13 “current monthly income” was extended to March 27, 2022.
Way back in March 2020, the CARES Act made some helpful temporary changes to consumer bankruptcy law. (See our blog post in April 2020 about this.) Some of these changes would have expired, but in the meantime, Congress passed two other laws which extended the changes. These are still temporary, so it’s important to know the new deadlines. Last week we focused on one change dealing with Chapter 7’s means test. Today we focus on a similar change and new deadline about Chapter 13’s crucial “current monthly income” calculation.
The Crucial Role of Your “Current Monthly Income” in Your Chapter 13 Payment Plan
Means Test Extension beyond the CARES Act
The CARES Act’s March 27, 2021 deadline for excluding pandemic relief payments from the means test was extended by one year to March 27, 2022.
At the beginning of the pandemic, the CARES Act made some helpful temporary changes to consumer bankruptcy law. (See our blog post in March 2020 about this.) Those changes had expiration dates which have now passed. However, in the meantime, Congress passed two other laws which extended the changes. They are still temporary changes. As time passes, these consumer bankruptcy law changes and their new expiration dates continue to be important. Today we focus on one of these changes pertaining to the Chapter 7 means test.
All Pandemic Relief Payments Excluded as Income for the Means Test
The point of this first change is to prevent the pandemic relief payments from disqualifying people from Chapter 7, “straight bankruptcy.” People could receive and spend their payments without jeopardizing their bankruptcy options. Here’s how it works.
Can I File For Bankruptcy Without My Spouse if I Am Married?
One of the biggest concerns that people have when they file for bankruptcy is how it will affect their financial situation. Many people who are married have shared finances with their spouse, making bankruptcy that much more difficult. Many people falsely believe that when they are married, they must file for bankruptcy along with their divorce. However, even if you are married and have joint finances with your spouse, you can still file for bankruptcy individually. It is important to note, though, that filing for bankruptcy without your spouse can have an adverse effect on his or her credit, depending on the situation.
What Happens to Our Property?
In Texas, any property that either spouse acquires during the course of the marriage is considered to be joint property. However, for the purposes of bankruptcy, joint property is only considered to be that which has both you and your spouse’s name on it. For example, if a person files bankruptcy separately from their spouse in Texas, all of the property that they own -- even jointly -- is part of the bankruptcy estate. This means a spouse’s vehicle can also be included in the bankruptcy estate, even if they have financed the vehicle alone.
Borrowing to Pay Medical Debts
Borrowing to pay medical debts creates new potential risks. A debt that was easy to discharge in bankruptcy becomes one that you often can’t.
About one-fourth (26%) of American adults (18-64 years old) reported that they or someone in their household had problems paying medical bills during the previous year. This is according to a 2016 survey by the highly reputable Kaiser Family Foundation, The Burden of Medical Debt. Not surprisingly, more than half of people who did not have health insurance reported such problems. However, more than one-fifth of people who had health insurance still had trouble paying medical bills. So if your medical bills are a challenge for you, you are clearly not alone.
You may have options short of borrowing money to pay off the medical debts. It’s worth contacting the medical creditor—as early as possible—to find out their payment alternatives. Sometimes interest-free repayment plans are available. In some situations, medical providers are willing to negotiate a settlement with you reducing the balance. Especially if you are uninsured, you might even qualify for financial assistance.
Affordable Care Act Enrollment Deadline of August 15, 2021
The usual deadline to apply for health care coverage under the Affordable Care Act was Dec. 15, 2020. It’s now been extended to Aug. 15, 2021.
Our last several weeks of blog posts have been about health insurance and medical bills. Two weeks ago, we got into the topic of health insurance and bankruptcy. Last week was a Q&A about medical bankruptcy. Today we provide urgent information about the current extended Special Enrollment Period for getting insurance under the Affordable Care Act.
Two Key Changes
In the last several months, there have been two major developments with the Affordable Care Act (“Obamacare”). First, a Special Enrollment Period allowed people to start health insurance coverage way past the usual December 15, 2020 deadline. Second, the American Rescue Plan Act lowered the cost of monthly premiums under the Affordable Care Act, often significantly.
What is the Difference Between Debt Settlement and Bankruptcy?
Being in debt is not uncommon. According to Bankrate, consumer debt across the United States has reached $14.2 trillion, with the average American being nearly $93,000 in total debt. There are many different types of debt, including credit card debt, student loans, car loans, or personal loans. When you are in debt over your head, you have a couple of options when you are seeking assistance. Both debt settlement and bankruptcy can help you get out of debt, but the method through which they do that could not be any more different.
Debt Settlement
Debt settlement is an alternative to bankruptcy that may be right for some people. Debt settlement occurs when you or a representative from a debt settlement company contact your creditor to negotiate a settlement amount that is typically much lower than the original amount you owed. In some cases, you may be able to negotiate the settlement so that you are only left responsible for 50 to 70 percent of what your total debt was. The upside to debt settlement is that it is not a legal process. You do not have to file anything with the court. Furthermore, debt settlement does not have the same long-term effect on your creditworthiness as bankruptcy.
Answers about Medical Bankruptcy
Even though legally, there’s no such thing as a medical bankruptcy, many bankruptcies are caused by medical problems. Here’s a Q&A about these.
In the last two weeks, we’ve written about health insurance. Two weeks ago, we discussed the six months of free health insurance provided by the recent American Rescue Plan Act. Last week we got into the broader topic of health insurance and bankruptcy. Today we broaden it out even more with a Q&A about medical bankruptcy.
What is Medical Bankruptcy, Legally?
Although the phrase is thrown around a lot, legally, there is no such thing. The legally designated types of bankruptcy are labeled according to their Chapters in the U.S. Bankruptcy Code. Chapter 7, the so-called “straight bankruptcy,” and Chapter 13 “adjustment of debts,” are the most common forms of personal bankruptcy. Both Chapter 7 and 13 can deal effectively with medical debts and other financial problems arising from medical events.
Health Insurance and Bankruptcy
Having health insurance is extremely important. Both Chapter 7 and Chapter 13 bankruptcy can help you get and keep your health insurance.
Last week we discussed the 6 months of free health insurance provided by the recent American Rescue Plan Act. It may apply to you if you lost your job and your health insurance with it. If this applies to you please check out that blog post.
Today’s blog post gets into the broader topic of health insurance and bankruptcy.
There’s lots of evidence “that medical bills are the single largest causal factor in consumer bankruptcy.” Medical Debt as a Cause of Consumer Bankruptcy. Studies have been showing this for many years.
What may be more surprising is that most people who file for bankruptcy have health insurance at the time of filing. According to one study, nearly 70% of personal bankruptcy filers had health insurance. Medical Bankruptcy in the United States, The American Journal of Medicine.
What Is a 341 Meeting of Creditors During a Texas Bankruptcy?
The United States Bankruptcy Code allows for different types of bankruptcy under certain circumstances. Only some of these are available to individuals, with the two most common types of bankruptcies being Chapter 7 and Chapter 13 bankruptcies. Even though the steps taken to discharge debts are different, both Chapter 7 and Chapter 13 bankruptcies must take a few common steps. One of those steps is the meeting of creditors, also known as the "341 meeting of creditors" or the "341 hearing" after the portion of bankruptcy code it is written into. No matter the type of bankruptcy you end up filing for, understanding the steps of the bankruptcy process are important.
What Is a 341 Meeting of Creditors?
In most cases, you will not have to appear in court before a judge to complete your bankruptcy. One of the most important steps of the bankruptcy process is the 341 meeting of creditors, which typically takes place in a courthouse, with a trustee presiding over the hearing, rather than a judge. The purpose of the meeting of creditors is essentially for the bankruptcy trustee to verify your identity, ensure your forms are filled out correctly and that all of the information given is accurate.
Get 6 Months of Your Health Insurance Premiums Paid
You could get 100% of your health insurance paid from April through September 2021 if you lost your employer-based insurance during the pandemic. Last month’s American Rescue Plan Act included the $1,400 stimulus payments, expanded unemployment insurance, and many other benefits. One other lesser-known benefit pays your health insurance if you’ve lost your job and your health insurance with it. Today’s blog post talks about this new free health insurance.
What is This Health Insurance Benefit?
This benefit could potentially pay your and your family’s entire health insurance premiums for April through September of 2021. The White House, American Rescue Plan.
That could save you lots of money. You’d save by not having to pay the monthly insurance premiums. You could especially save by having coverage for any health care costs that would arise during this time.
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