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Bridgeport Law Blog

The length of credit card debt

Most consumers in Connecticut and around the country who owe money to credit card companies carry the debt for more than a year according to a poll conducted by CreditCards.com. Almost a quarter of the consumers who participated said that they had carried such debt for at least three years, and 14 percent said that credit card companies had been charging them interest for five years or longer. The study also reveals how income influences the way consumers handle credit card debt.

While individuals who are struggling to earn a living are more likely to have credit card debt, Americans with higher incomes tend to carry their balances for longer periods. Only about 7 percent of the consumers earning less than $30,000 indicated that their credit card balances were five years old or older, but that figure jumped to 17 percent among respondents earning $80,000 or more.

The ACA has done little to address crippling medical bills

About two-thirds of the people who file personal bankruptcies in Connecticut and around the country each year do so to avoid crushing medical bills, according to a recent study published in American Journal of Public Health. A team of researchers that included a doctor from the Hunter College of City University of New York, two lawyers and a Consumer Bankruptcy Project sociologist came to this conclusion after studying 910 Chapter 7 and Chapter 13 bankruptcy petitions filed between 2013 and 2016.

The research has attracted a large amount of media attention as it is the first major study of medical debt-related bankruptcy since President Obama signed the Affordable Care Act into law in 2010. Lawmakers hoped that the landmark health care law would address the problem, but the researchers found little evidence to suggest that this has happened. According to the research team, as many as 530,000 American families face financial ruin because of illness or injury each year.

Reasons to consider a living will

Life-altering accidents and infirmities are not conversations that Connecticut residents like to discuss. Unless they are faced with a terminal illness or unless they lose someone close to them, most people would prefer to focus their mind on things like their plans for today or the future. This is why many procrastinate or completely put off creating a living will or a health care directive.

A living will or a health care directive will provide instructions that cover what should be done for people, their estates, and their dependents if something happens and they are no longer able to care for these decisions themselves.

How student loans are dealt with during a bankruptcy

Prior to 1976, Connecticut residents could potentially have their student loans discharged through bankruptcy. In 1976, the law was amended to include student loans that had been in repayment for at least five years. That was later extended to seven years before Congress moved to exclude student loans from most bankruptcy cases. Today, an individual can only have such debt wiped away in bankruptcy if making payments constitutes a hardship.

Most courts use the Brunner test to determine if such a hardship exists. To pass the test, a person would first need to show that he or she couldn't maintain a minimum standard of living because of student loan obligations. Furthermore, it must be shown that the hardship will exist for as long as the debt is outstanding. A borrower must make a good faith effort to make payments even if none are actually made.

Dischargeability of tax debts in bankruptcy

Bankruptcy is an option for people in Connecticut who are struggling to pay off their debts, but there are certain types of debts that may not be discharged. Tax debts are not dischargeable unless they meet special requirements. Generally speaking, tax debts cannot be discharged if they are withholding trust fund taxes for which the person is liable, associated with a tax liability for which the person did not file a return or associated with a frivolous or fraudulent return.

Additionally, if the person willfully tried to evade liability for the taxes or the tax debts are tied to returns that were filed late within two years prior to the bankruptcy filing, they will generally not be dischargeable. In order for a tax debt to be eliminated in bankruptcy, it must be related to a return that was due three years or more before the bankruptcy filing and filed two years or more before the bankruptcy filing. These taxes must have been assessed 240 days or more prior to filing for bankruptcy.

Options for dividing a home in a divorce

When people in Connecticut get a divorce, they may have to decide what to do with the home they own. Some couples might agree to sell the house, but this often comes at the order of a judge rather than through negotiations.

If one spouse takes the home, that person should make sure that the mortgage, taxes and other upkeep is affordable. Another common error spouses make is not removing the one who no longer owns the home from the deed even if they refinance the mortgage. While this can be a way to reduce paperwork, it also means the couple remains linked financially. If an amicable divorce stops being amicable, this could create problems.

Divorce and finances

Many issues can cause a marriage to fail, including finances. However, Connecticut couples can make sure that financial problems do not contribute to the end of their marriage.

Experts state that the divorce rate in the United States ranges from 40 to 50 percent. According to one 2017 study, 59 percent of couples reported that financial problems had a role in the end of their marriage. Twenty percent stated that financial problems contributed substantially to their divorce, while another 26 percent report that the credit score of their spouse was a cause of anxiety in the marriage.

What to do in a divorce if one parent drinks too much

Many problems can arise when Connecticut parents are going through a divorce. While most issues can be resolved through negotiation and compromise, situations can be much worse if one parent has a problem with alcohol. For example, there may be justifiable concerns with a parent drinking and driving with a child in the car.

A parent could potentially get emergency custody if there is evidence showing that the child is in danger. Unfortunately, without a police report or another kind of proof, it could be difficult for the parent to demonstrate this. Child care providers or other witnesses might be able to provide testimony. However, alcohol abuse may be particularly difficult to prove.

Tips for keeping credit card debt manageable over the holidays

With Black Friday coming soon, many people are getting ready for their holiday shopping. One thing people may want to include in these preparations are plans on how to financially handle the holiday spending.

It is fairly common for consumers to use credit cards in connection to holiday shopping. In a recent survey, nearly three out of four shoppers said they plan on buying holiday presents with a credit card this year.