You Deserve Financial Relief

Russell G. Small

Bridgeport Law Blog

Older adults struggle with medical bills

Older adults in Connecticut could be at risk of bankruptcy because of medical debt. When people who are older file for bankruptcy as a result of medical bills, they have usually run out of savings. Many are either not working at all or working reduced hours, so their income is limited. In 1991, just 2% of bankruptcy filers were 65 and over compared to 12% now.

In addition, the number of people 55 to 64 who filed for bankruptcy in 2016 was up 66% compared to 1991. For people 65 to 74, there was an increase of 204%. Some of these people are in the situation of one 66-year-old retired handyman who said that because of multiple injuries, his could no longer keep up with his medical expenses and had to file for bankruptcy. He hoped to be able to work out a loan modification with his bank that would allow him to remain in his home of 40 years.

The statute of limitations for unpaid debts

Connecticut residents who have bills that they are unable to pay often deal with daily phone calls or letters from banks, credit card companies and debt collectors, but state law places strict limits on how long creditors can pursue unpaid debts in court. The statute of limitations for unpaid debts is six years in Connecticut, but consumers who are struggling with unmanageable financial situations are sometimes confused about this timeline and when the clock starts to run.

The six-year statute of limitations for unpaid debts begins to run when the debt goes into default, but it resets when a payment is made. This means that if a Connecticut consumer makes a payment on an unpaid debt five years after it became delinquent, the six years allowed under the statute of limitations would begin all over again. Once the time allowed under the statute of limitations has passed, creditors or bill collectors are no longer able to take legal action against borrowers. However, they may still seek payment.

Determining if bankruptcy is the right choice

New Jersey consumers who are in debt have several options to reduce or eliminate it. There are many factors that may influence which tools they use to reduce the amount that they owe to creditors. For instance, those who make $100,000 a year may be able to commit to paying creditors in full without the need for a debt settlement or bankruptcy. Those who have a limited income may want to pursue a Chapter 7 bankruptcy.

One primary advantage of Chapter 7 bankruptcy compared to a debt settlement is that any amounts that are forgiven in bankruptcy will not be considered taxable income. It is also important to consider that there is no guarantee that creditors will work with debtors to forgive some or all of their debts. Even if a deal can be reached, the terms of the deal will likely be slanted in favor of a creditor.

How bankruptcy can affect a credit report

Many people in Connecticut are struggling to make ends meet. They may suffer significant credit problems as well as collector calls and ongoing harassment when dealing with substantial amounts of unrepayable debt. While personal bankruptcy can offer a path to relief, many may be hesitant to take the step to file because they are concerned about the effects on their credit reports. People who are unable to pay their bills may already be suffering from bad credit scores, and the effects of bankruptcy can be different depending on each person's situation.

The most common form of personal bankruptcy is Chapter 7 bankruptcy. In this type of bankruptcy, most debts can be forgiven, including credit card debts, personal loans or medical costs. Chapter 7 bankruptcy is available for people who make approximately the median income or below, and it can remain on a person's credit report for 10 years. Depending on the filer's original credit score, Chapter 7 could make it drop by as much as 200 points. The drop may be less significant if the filer has already accumulated a string or late of non-payment records. When filing for Chapter 7 bankruptcy, people must liquidate most of their assets.

Many people struggle with mounting credit card debt

People in Connecticut and across the country are facing an increasing burden of credit card balances. According to a credit card debt study by WalletHub, Americans began 2019 owing over $1 trillion in credit card bills. In the second quarter of 2019, consumers nationwide accumulated $35.6 billion in credit card debt, a national record for a one-quarter increase in debt. Over the year to come, the study estimated that another $70 billion in debt would be accumulated. Connecticut ranked 26th in the country in terms of debt accumulated, falling roughly in the middle of the pack.

Still, many Connecticut residents are finding it difficult to make ends meet. Credit cards can be handy for urgent expenses like car repairs, home fixes or medical bills, but people may find themselves facing difficulties paying off the bills, especially as interest expenses add up. The larger a credit card bill, the longer it takes to pay it off, which could then lead to even bigger interest payments. Around 39 million Americans have been in credit card debt for a minimum of two years, and many people have more debt than they do savings.

Disabled vets receive greater bankruptcy protections

Military veterans in Connecticut may be at particular risk for financial problems and challenges in their years after leaving the armed services. These challenges can be exacerbated for disabled veterans who rely on military benefits to pay the bills. Veterans may find themselves facing significant debt that they are unable to repay, and filing for bankruptcy can be an important way to seek relief. Around 15% of filers for both Chapter 7 and Chapter 13 personal bankruptcy are military veterans; however, veterans comprise only 10% of the overall population. In 2017 alone, around 125,000 American veterans filed for personal bankruptcy.

Disabled veterans often find themselves facing additional difficulties in the bankruptcy process. While Social Security Disability benefits are excluded from consideration of disposable income, many types of disability benefits provided by the Department of Veterans Affairs or the Department of Defense have not been excluded. To file for Chapter 7 bankruptcy, filers can only make below a certain income threshold. A debtor's disposable income is used to calculate a mandatory monthly payment for Chapter 13 bankruptcy. That's why disability payments have been within a creditor's reach during bankruptcy proceedings.

What to understand before filing for bankruptcy

Debtors who are thinking about bankruptcy will generally choose between filing for Chapter 7 or Chapter 13 protection. Connecticut residents who want to pursue a Chapter 7 case will need to take a means test to verify that they cannot repay their debts. If an applicant passes a means test, assets will be liquidated with any money raised going to repay creditors.

It's important to note that some debts such as student loans or back child support cannot be erased through bankruptcy. It's also worth noting that a Chapter 7 bankruptcy remains on a credit report for up to 10 years. A Chapter 13 case only stays on a credit report for seven years. In a Chapter 13 proceeding, debts are repaid over three or five years. Debtors are allowed to retain property such as a home or car during the repayment period.

Understanding Chapter 7 and Chapter 13 bankruptcy

When people in Connecticut are dealing with piles of unpayable bills or aggressive collection calls, they may be looking for a solution that allows them to obtain some debt relief. Bankruptcy can provide people with a new start that enables them to escape a mountain of debt. There are some credit consequences, but many people who turn to bankruptcy have already suffered serious hits to their credit. However, there are different types of personal bankruptcy. Each may be appropriate for people in different situations.

Chapter 7 bankruptcy is perhaps the best-known type of personal bankruptcy. Known as a liquidation bankruptcy, a filer's unsecured debts are eliminated and assets sold off to pay a portion of the creditors. The process lasts around three to six months before the bankruptcy is completed. However, only people who make an amount of money equal to or less than the median income in their state are eligible for Chapter 7 bankruptcy. People with high-paying jobs and large debts may find that this option is not available to them. Others may want to retain certain types of property, such as a family home, that would be sold off. Chapter 13 bankruptcy may be an option for both.

Credit card debt can be costly

For many people in Connecticut, it is very difficult to pay off their credit card bills on a monthly basis. With high interest rates, people may find that their balances continue to rise. This can be especially true for people who have suffered a financial change since they first began to accumulate credit card debt.

According to economists, 82% of credit card balances are not paid off every month, and most of them turn into long-term debt. Of these, around 70% of credit card bills stick around for at least a year, and 55% linger on for at least two years.

Debtors have options in responding to collections actions

The Consumer Financial Protection Bureau reports that more than 70 million people nationwide have at one time or another had to deal with debt collectors. Around one-quarter of people said they felt threatened by the collection agency during their interactions. In such situations, it can seem like the creditors have all the power, but there are things people in Connecticut can do to respond to debt collection actions.

One of the first things is to respond. If the debtor fails to respond, the collections agency may be able to get a default judgment, which may allow them to garnish the person's wages or reach into bank accounts to secure funds. When filing a response, called an answer, it is important not to admit liability for the debt. The answer should be filed with the appropriate clerk of court. It is a good idea to get a stamped copy of the answer from the clerk and send the copy to the debt collector.

How can we help?

Financial Freedom Is Just A Call Away

When you are overwhelmed by debt, we can help you explore your options and find relief. Should you choose to file for bankruptcy, calls from creditors and debt collectors come to a stop almost immediately, allowing you to get back to living your life.

Call us today at 800-261-3275 or contact us online to schedule a consultation. Our firm offers evening and weekend appointments and home visits. Credit cards and payment plans are accepted. Se habla Español.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Email Us For A Response

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

get in touch

The Law Office of Russell Gary Small, P.C.

3715 Main Street
Suite 406
Bridgeport, CT 06606

Map & Directions

Hours of Operations:

Monday-Friday:
9 a.m.-6 p.m.
Saturday & Sunday:
By Appointment Only