Bankruptcy And You: Medical Debt, Student Loans, And Mortgages

There are many roads to bankruptcy and some of them may surprise you. Families often go along for years without any serious financial problems and suddenly find they are unable to pay their bills. Medical emergencies, student loans, and climbing interest rates on mortgages, combined with uncertain employment can have disastrous effects on your family’s finances. Learning more about some of the causes of bankruptcy may help you to avoid needing the services of a law firm.

The most common causes of bankruptcy in the United States are medical expenses, job loss, and too much spending. Add student loans or a flexible rate mortgage that keeps going up to even one of these factors and the financial scales will tip against you.

Bankruptcy & Medical Debt

According to a Harvard study, nearly two-thirds of all personal bankruptcy filings are related to medical costs. A single car accident or debilitating illness can eliminate your family’s income, add extra medical expenses, and devastate your savings. One family in four will face this dilemma before retirement age and it is not enough to have medical insurance. Your medical insurance may cover 80% of your medical costs, but what if the total due is $300,000? If you are like the majority of American families who are living paycheck-to-paycheck, you simply do not have an extra $60,000 laying around. To compound the problem, the instinctive response is to use a credit card to pay the balance. The high interest rates commonly charged by credit card companies, when combined with a loss of income, can make it impossible to pay for anything. Unless you are prepared with a nest egg of 3-6 months of living expenses and have a good disability insurance policy, you are nearly assured of facing either Chapter 7 bankruptcy or Chapter 13 bankruptcy in short order. If your family is experiencing serious medical debt, it is a good idea to take advantage of free consultations offered by law firms specializing in bankruptcy to learn how to protect your financial future.

Student Loans & Bankruptcy

Student loans are generally considered an investment in the future, leading to a lucrative career, but this isn’t always the case. Today’s volatile job market has left many graduates under a mountain of student debt and still no job in sight. While President Obama has promised to boost bankruptcy protection for students with overwhelming student loans, it does not counteract the long term effects of filing for either Chapter 13 bankruptcy or Chapter 7 bankruptcy and then rebuilding your credit. Before deciding if bankruptcy is right for you, speak to a lawyer about your legal and financial options and obligations. It is also important that you create a spending plan that keeps expenses under control. Many college students end up facing bankruptcy after accepting a too-good-to-be-true credit card offer, and learning the hard way that debt can be a heavy load to carry.

Mortgages, Foreclosure, And Bankruptcy

Today’s difficult economic conditions make jobs less reliable than they once were. All it takes is for the family provider to lose their job, making it difficult or impossible to make mortgage payments. A few payments later, you may be facing foreclosure and bankruptcy. Before losing your home to foreclosure, it is critical that you speak with a bankruptcy attorney about your financial options. If you wait too long, going bankrupt cannot help you to keep your home. Both Chapter 7 bankruptcy and Chapter 13 bankruptcy can allow you to keep your home, under specific conditions. Speak to an attorney to learn the facts in your state.

Financial Problems & Solutions

Financial difficulties come in many forms, and solutions are equally varied. The first step to avoiding the need to speak with an attorney about bankruptcy is to live within your means and create a financial buffer against emergencies and job loss. The next step is to protect yourself with adequate disability insurance.

If you are facing bankruptcy, whether because of medical expenses, student loans, or a possible foreclosure, seek the advice of a trusted bankruptcy attorney. Your lawyer can explain the pros and cons of Chapter 7 bankruptcy, Chapter 13 bankruptcy, and debt consolidation. Don’t bankrupt your peace of mind along with your bank account. You can find solutions at your local bankruptcy law firm.