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Category: Blog
Can you get rid of credit card debt with bankruptcy?

On Behalf of O’Brien Law Firm, LLC

Posted on: October 22, 2021

If you have been struggling to pay for everyday items recently, it may not surprise you that prices have increased. In fact, the U.S. Bureau of Labor Statistics consumer price index shows a 5.4% jump in prices in the last year alone. This may leave you with little choice but to reach for your credit cards to make ends meet.

Credit card debt can sneak up on you quickly. If you have excessive debt or can only make the minimum payments on your cards, you may be looking for debt-relief options. Fortunately, with both Chapter 7 and Chapter 13 bankruptcy filings, you can probably discharge most or all of your credit card debt.

Chapter 7 bankruptcy

With Chapter 7 bankruptcy, you disclose all your assets and debts to the bankruptcy trustee. The trustee may then sell some of your assets to pay your creditors. There are many exemptions, though, so you are not likely to lose everything. Then, you no longer have to pay debts that qualify for discharge. Unsecured debts, like credit card balances, unusually fall into this category.

Chapter 13 bankruptcy

Chapter 13 bankruptcy works differently than Chapter 7 bankruptcy, as you and the bankruptcy trustee come up with a repayment plan for your outstanding debts. At the end of your repayment period, which may be three or five years, your remaining credit card debt is typically dischargeable. That is, once you complete your repayment plan, your qualifying credit card debt goes away.

There are many factors that influence whether your debt is dischargeable during bankruptcy. Ultimately, so nothing catches you by surprise, it is critical to explore all your legal and financial options before filing for either Chapter 7 or Chapter 13 bankruptcy protection.

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3 Truths to change your perspective on bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: September 17, 2021

If you are drowning in debt and your self-esteem and motivation are at their lowest, you are not alone. The truth is, facing unpayable debts can be a terrifying and stressful experience for many people. Anxiety and depression are common.

Despite everyone’s constitutional right to file for bankruptcy, there are still many lingering myths and stigmas that can keep debtors down throughout the process. To help overcome these feelings, it can be helpful to shift your perspective on things.

Debt does not define your worth

There are many reasons why a person might have debt. While some reasons might reflect personal choices like poor money management, others do not. For example, significant consumer debt in the U.S. reflects medical emergencies. Regardless, your reasons for debt do not define your worth.

Bankruptcy is a constitutional right and protection

At the end of the day, bankruptcy is one of your constitutional protections. It protects you, the consumer, not the creditors to whom you owe money. When you think about the logic of the situation, it makes sense why they would not encourage you to file; it is not in their favor.

Bankruptcy is an opportunity

For consumers who are considering bankruptcy, debt can feel crushing. Sometimes, it can feel like failing. While you may be struggling right now, filing for bankruptcy can give you the opportunity to both start over as well as increase your knowledge about personal finances and budgeting.

Undeniably, facing bankruptcy can be challenging, but changing your perspective can end up changing your entire situation.

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Can medical debt be discharged during bankruptcy?

On Behalf of O’Brien Law Firm, LLC

Posted on: July 13, 2021

Falling ill or facing an injury may leave you strapped for cash. If you are unable to work, you may sink further and further into debt. Bankruptcy may prove the best way to relieve some of the stress debt causes.

What happens to the medical debt during bankruptcy? The good news is that, like most unsecured debts, medical bills are available for discharge. Depending on the route you take through the process, the way the court handles it varies.

Chapter 7 discharge

Chapter 7 bankruptcy involves liquidating certain assets to pay a portion of your debts. A court-appointed trustee will place your creditors in line to receive payment after this liquidation. Secured debts are those things with collateral attached, such as your home. Unless you want out of your mortgage, you will likely retain your home even during liquidation. After secured debts come those that do not have collateral. These unsecured debts include credit cards and medical bills. If you follow the terms set forth by the trustee, the judge will discharge your unsecured debts if there is not enough money to pay them. This includes your medical bills.

Chapter 13 repayment

Chapter 13 bankruptcy does involve the discharge of unsecured debts, but it also requires repayment of a portion of the debt. The hallmark of Chapter 13 bankruptcy is a repayment plan that fits with your income. The trustee gathers your debts, looks at your income, and gives you one monthly payment to make for a period not to exceed five years. After you make the requisite payments, the judge will discharge the remaining debts, including medical bills.

Bankruptcy may provide you a way to get out from under the medical bills that put you in debt in the first place.

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Do you qualify for mortgage modification?

On Behalf of O’Brien Law Firm, LLC

Posted on: May 6, 2020

If you are struggling with unpaid debt and own a home, you have likely considered both mortgage modification and bankruptcy. In fact, individuals can file a bankruptcy case and apply for mortgage modification.

These are the factors your home loan provider will review when deciding whether to modify your mortgage.

Late payments

In general, you must already have past-due mortgage payments to apply for a loan modification. If you are delinquent on your mortgage or in danger of falling behind, call your mortgage company and ask about options to make your loan more affordable.

Change in life circumstances

You may need to show that issues beyond your control caused your inability to pay your mortgage. This could include:

  • Illness, injury, disability or other health problems 
  • Death of a family member 
  • Divorce 
  • Job loss 

Federal mortgage relief options

Some mortgage companies may offer a modification plan under the CARES Act. This law, passed in March 2020, includes the following provisions:

  • Delay on foreclosure proceedings for 60 days as of March 18, 2020 
  • Forbearance available for up to 180 days with a 180-day extension 

You can request this program directly from your mortgage company. The service may not charge additional fees, interest or penalties during this period. However, you will have to make up the skipped payments at a later date. This could be in graduated payments over time or as a balloon payment at the end of your mortgage. Make sure to read the loan agreement carefully for this type of modification.

Federally backed mortgage companies must offer these options. Other home loan providers can opt to offer modification but are under no requirement to do so.

When you receive a modification, the lender has discretion about how to adjust your loan to make it more affordable. This could include a lower monthly payment, a lower interest rate, a longer repayment term or a combination of those measures.

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5 common reasons people file for bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: April 3, 2018

Financial calamity is sometimes unavoidable. Unfortunately, something may happen in your life that leaves you struggling to make ends meet. If you are racking up debt and are considering filing for bankruptcy, you are not alone. Millions of people declare bankruptcy in America every year.

But why is bankruptcy such a prevalent issue? What brings so many people to the brink? Here are some common reasons that Americans file for consumer bankruptcy.

1. Medical bills

According to USA Today, the majority of U.S. bankruptcy filings occur due to medical bills. Health care debt is the leading cause of bankruptcy. Even if you have health care insurance you may fall victim to huge medical costs. A sudden injury or illness may drain your savings, making bankruptcy your best option.

2. Job loss

Whether it is because of a layoff, firing or resignation, losing income can be devastating. If you are lucky enough to get severance pay, you may be able to survive for a little bit until you find a new occupation. But even then, there is no guarantee when you will find a new job. Not having a job may quickly make your savings and assets go down the drain.

3. Dissolution of marriage

Divorces create a significant amount of financial stress on both people. Dividing marital assets, paying legal fees, living on a single income and making support payments may make it difficult for you to pay your bills.

4. Credit card debt

Credit is a useful tool. However, it may sometimes rack up your debt. While overspending is one issue, you may also accumulate credit debt if you use your card to cover a disability, job loss or emergency expense.

5. Foreclosure

If you have financial troubles and are not able to make your mortgage payments, you may be at risk of losing your home. Filing for bankruptcy may be one way to avoid a home foreclosure.

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