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Phoenix Bankruptcy Law Blog

Passage of American Health Care Act brings more medical debt

Last month, the House of Representatives passed the American Health Care Act, which if it becomes law, would repreal and replace the Affordable Care Act, or "Obamacare," as it is commonly called.

This week, the Congressional Budget Office released its report, indicating that under the proposed AHCA, by next year, 14 million Americans would lack health insurance. That number is projected to climb to 51 million by 2026 for those younger than 65.

What is the means test, and will I pass it?

Consumers who are considering filing for Chapter 7 bankruptcy protection usually must pass a means test first to qualify.

Initially, debtors must average their income for the half-year prior to the filing of the petition for bankruptcy relief. They qualify as long as their earnings were not more than Arizona's median family income. In some cases, trustees can intervene even when debtors pass the means test if they discover that the debtors have money left after expenses to pay back their creditors. Those bankruptcies may then convert to Chapter 13 bankruptcy restructuring.

Are debt collectors making your life miserable?

When the phone rings, do you dread who may be on the other end? Are you tired of dodging debt collectors at home -- and even more embarrassing -- on the job?

If so, you may take some small measure of comfort in realizing that you are not alone. Millions of American consumers struggle with unpaid debts from student loans, medical bills and out-of-control credit card spending.

Can a Chapter 13 bankruptcy be converted to a Chapter 7?

Consumers in the midst of Chapter 13 bankruptcies sometimes find that the payments are too onerous to keep up with. They may wonder about the possibilities of converting their bankruptcy filing from a Chapter 13 to a Chapter 7 and still retain possession of the family home.

While there are exceptions to everything, in general this is either not possible or a very risky venture. Below are the reasons why.

What would the American Health Care Act do to medical debt?

People who don't have health insurance can quickly build up so much medical debt that it will make your head spin. It might even make your heart skip a beat if you try to imagine how long it will take to pay down those bills. Fortunately for many Americans, the Affordable Care Act has provided a source of health insurance that's helped them sidestep the need to fall into serious medical debt in order to get the medical treatment they need to get healthy.

However, on March 24, federal lawmakers introduced a bill to repeal and replace the ACA. That bill was called the American Health Care Act, and although this repeal and replace measure was later pulled, it did cause some people to wonder if they would lose the health insurance on which they've come to rely.

What are some common myths about credit?

Have you heard that checking your credit score can cause it to drop? If so, you're not alone. This is one common myth about your credit score. Checking your credit score will not change it because it is counted as a "soft inquiry." If a lender inquired on your credit score, it would be considered a "hard inquiry." It is possible that could lower your score slightly. Here are some other myths about your credit:

-- Paying off a debt will send your credit score up by 50 points.

Don't let keeping up with the Joneses run you deep into debt

At some point over the past few decades, having debt became normalized for the individuals here in the United States. Past generations shunned the idea of owing and buying on time. But today, many families live beyond their means on a regular basis.

On average, American households owe more than $10K just on their credit cards — without factoring in the balance on student loans, home mortgages or monthly car notes.

Are you ready to break the chains of debt?

Credit card debt can enslave even the hardest workers at every income level. It becomes like a snowball rolling down a mountain, and eventually it becomes an avalanche that buries you.

Mentally deciding that you are ready to cast off your shackles and taking the necessary steps to debt-free living are two different things, however. To truly live a debt-free life requires lifestyle changes on both a small and large scale.

How long will it take to complete my Chapter 7 proceedings?

No one enjoys the Chapter 7 bankruptcy process. It's like braces on your teeth. It's a little painful, and it takes awhile, but once it's done, the benefits are worth it. In the case of bankruptcy, you'll have a beautiful financial condition to be proud of -- one that's free of all the debts that were covered by the bankruptcy. Considering that bankruptcy isn't "fun," though, you probably want to know how long Chapter 7 takes.

The answer to this question is two-fold. Not only do you want to consider how long the bankruptcy process itself lasts, but you also want to look at how long it will take for your credit report to repair itself. As far as the process itself, you'll finish your bankruptcy proceedings in about three to four months. If your creditors try to fight the bankruptcy, though, it could take longer.

Can my medical bills land me in bankruptcy court?

There are many reasons consumers file for bankruptcy — a job loss, unrestrained spending, a divorce that leaves you with fewer assets than liabilities, inability to keep up with mortgage payments.

But research conducted by NerdWallet Health in 2013, indicated an alarming trend. Medical bills that consumers accrue after an illness or accident have become the primary reason for most consumer bankruptcy filings, eclipsing both mortgage and credit card debt.

Dan R. Dodds Dan R. Dodds

At the Dodds Law Firm, I focus my practice on the needs of individuals who have suffered losses because of abusive, deceptive or unfair conduct by others. I also provide comprehensive counsel in all matters related to Chapter 7 and Chapter 13...Read More

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