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Minneapolis Bankruptcy Law Blog

When credit card debt becomes insurmountable, we can help

It seems impossible to believe, but Christmas is now just a week away. While this means spending more time with family and friends, it also means spending more in general.

Indeed, many Americans have been going online or heading to local malls in recent weeks to buy gifts for family, friends and co-workers, likely putting their purchases on their credit cards.

This use of plastic hasn't just been confined to the holiday season, however. Recently released figures from the website Cardhub.com show that credit card spending by U.S. consumers increased by $16 billion in the third quarter.

As shocking as this might be, consider that Cardhub.com also determined that if current rates hold through the fourth quarter, an additional $60 billion in new credit card spending will occur, pushing 2014's final figure 55 percent higher than 2013.

Some important background information about Chapter 13 - II

This past summer, our blog devoted some time to discussing Chapter 13 bankruptcy in an attempt to not only provide some valuable insight into how the process works, but also to debunk certain myths.

Our purpose in doing this was to help show those people facing significant financial difficulties that Chapter 13 is nothing to fear and can actually provide a much-needed lifeline when it seems as if there are no viable options left.

To recap, Chapter 13 bankruptcy enables people with a regular income and significant financial troubles -- known as debtors in U.S. Bankruptcy Court -- to devise a repayment plan in which they pay back all or a portion of their debts owed to creditors over a three- to five-year period.

As inviting as this prospect may sound, it's important to remember that there are certain eligibility requirements that must be satisfied in order to file for Chapter 13.

SCOTUS to review cases involving Chapter 7, second mortgages

The Supreme Court of the United States recently announced that it was going to hear arguments in two cases addressing what one court filing characterized as perhaps "the single most important unresolved issue in consumer bankruptcy."

The unresolved issue in question is whether a homeowner who has filed for Chapter 7 bankruptcy protection and has two mortgages can essentially "strip off" -- or void -- the second mortgage if the home is underwater (i.e., the mortgage balance exceeds the current property value).

In other words, the court will decide whether second mortgages can be cancelled out in Chapter 7 if the underlying property isn't even worth enough to cover the first mortgage.

The two cases to be reviewed by SCOTUS were originally filed by Bank of America against two homeowners in Florida, a state hit especially hard by the recent housing market crash.

Is it possible to keep medical debt out of collections? - II

Last time, we discussed how medical debt is now a major financial problem here in America, with statistics showing that it now accounts for more than $1 out of every $3 owed to debt collection agencies.

We also discussed how even though personal bankruptcy is a viable solution for those facing seemingly insurmountable medical debt, they may nevertheless have the option of taking action earlier such that debt collectors never get involved.

In today's post, we'll continue looking at a few tips offered by medical billing advocates for keeping medical bills out of collections.

Is it possible to keep medical debt out of collections?

In our last post, we discussed how medical debt is rapidly becoming a major financial problem here in America.

Indeed, statistics show that roughly one in five adults here in the U.S. will be contacted by debt collectors regarding an unpaid medical debt sometime this year, while medical debt now accounts for more than $1 out of every $3 owed to debt collection agencies.

While those facing medical debt have the option of securing a fresh start via personal bankruptcy, they may also be able to take action earlier, preventing the matter from even being sent to collections in the first place.

This is significant, of course, as a credit score can be damaged once a bill is sent to collections, regardless of whether it relates to medical debt or other consumer debt.

In today's post, the first in a series, we'll take a brief look at a few tips offered by medical billing advocates -- experts trained in the fine art of locating errors in medical bills and negotiating payments -- for helping keep medical bills out of collections.

Don't feel hopeless when faced with significant medical debt

While most of us prefer not to think about it, the fact remains that an otherwise routine trip to the doctor's office can sometimes result in a life-altering diagnosis.

Take for example, a cancer diagnosis. Here, you might have to undergo a lengthy medical battle necessitating regular visits to specialists, many medications, multiple rounds of chemotherapy and perhaps even surgery.

Indeed, even if you are fortunate enough to emerge victorious from a cancer battle, chances are very good that you won't just be left with a vast amount of emotions, but also a vast amount of debt.

Indeed, statistics show that medical debt is now the number one cause of bankruptcy filings here in the U.S. and that, in general, medical debt is affecting countless people whose only real "mistake" was having the misfortune of falling ill.

Why bankruptcy doesn't have to be a barrier to home ownership

The memory of the recent recession is still all too real for many Americans as unemployment was high, home values plunged and foreclosures hit new levels. Indeed, statistics show that the number of personal bankruptcy filings began slowly climbing in 2007 before peaking at roughly 1.5 million in 2010.

Fortunately, economic conditions are now showing signs of improvement with more people headed back to work, home values rising and the number of foreclosures leveling off.

With these improving economic conditions, many of those people who filed for either Chapter 7 or Chapter 13 bankruptcy may now be looking to get back into the real estate market. However, they may believe that home ownership won't be an option anytime soon due to their recent bankruptcy filing.

As it turns out, however, this is not necessarily the case, as bankruptcy does not present an insurmountable barrier to securing a mortgage.

CFPB to consumers: Stay proactive when it comes to credit card debt

Thousands of Americans are caught off guard every year by unfortunate and unforeseen events -- illness, accident, divorce, unemployment -- that not only wreak havoc on their personal lives, but on their finances as well.

Not surprisingly, one of the first financial areas where a person is likely to encounter problems are their credit cards, which, despite carrying large debts, have always been manageable thanks to minimum monthly payments.

However, what happens when one of the unfortunate and unforeseen events mentioned above strikes, leaving a person unable to make these minimum monthly payments? Are they all out of options? Will their credit be destroyed?

Fortunately, the good news is that people facing dire financial circumstances due to circumstances beyond their control do have viable options.

Bankruptcy: the DIY debt relief option... with legal protection

With the recent recession still very fresh in the memories of families across the nation, more people have become consciously aware of the debts that they have accumulated. In social media there are more and more stories appearing about how a couple paid off their credit card, medical or mortgage debt in X-number of months or years. 

For instance, a recent story appeared in which a couple shared how they got into $20,000 worth of credit card debt. For this couple, there were a combination of factors that contributed to the large number. The wife took time off to care for their three children, they had some unexpected medical issues and bills simply became harder to pay.

Income can impact ability to receive a chapter 7 bankruptcy

When a person finds themselves swamped with debt, one form of relief they may end up seeking out is a personal bankruptcy. There are multiple different types of bankruptcies that are available to individuals. One of these is a chapter 7 bankruptcy. This type of bankruptcy is sometimes referred to as a liquidation bankruptcy.

There are a variety of different things that can play a role in whether a chapter 7 bankruptcy is a good fit for a person who is seeking bankruptcy relief. There also are certain things that can impact whether a person is even able to receive such a bankruptcy. One of these is a person's income.

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Huffman, Usem, Crawford & Greenberg, P.A., is just 10 minutes from the Hennepin County Courthouse in Minneapolis, Minnesota, and represents clients throughout the United States, Canada and Minnesota, including the cities of St. Paul, Golden Valley, Plymouth, St. Louis Park, Hopkins, Minnetonka, Wayzata, Edina, Brooklyn Park, Brooklyn Center, Anoka and Maple Grove, as well as Hennepin County, Ramsey County, Anoka County and Scott County.

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5101 Olson Memorial Highway, Suite 1000
Golden Valley, MN 55422

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t: (763)200-6595
f: (763) 545-2350

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