Medical Debt and Bankuptcy

Medical Debt can be disguised as credit card debt so its hard to get a true hold on whether clients are facing insurmountable credit card debt or medical debt when they file for bankruptcy.
Even in my personal situation I can vogue for this fact. I have three children and my wife lost her job at the end of 2007. We elected not to take COBRA coverage because it was too expensive. Two months later before she was employed again, she got pregnant and we therefore become non-insurable until after we had the baby. This put us in debt close to 20,000 dollars. I put a good portion of this on credit cards as it was easier to negotiate a reduced payment to the hospital if they were paid before check out. If we were put in the position of having to file bankruptcy, the schedules would show that we have credit card debt when in actuality its medical debt.
Fortunately both are unsecured so it wouldn’t be as bad as taking out a second mortgage on the house(who can do that anymore anyways), but nonetheless tracing what is medical debt and what is credit card debt can become hard when credit cards can mask what payments were made on.

Frequently Asked Questions: Debt Consolidation in California
How does debt consolidation affect credit scores?

Initially, it might cause a slight dip due to credit inquiries. However, consistent payments can improve your credit score over time.

What is the difference between debt consolidation and debt settlement?

Debt consolidation involves taking a new loan to pay off debts, while debt settlement is negotiating to pay less than you owe. Settlement can negatively impact your credit score.

What are secured vs. unsecured debt consolidation loans?

Secured loans require collateral (like a house or car), usually with lower interest rates. Unsecured loans don't require collateral but typically have higher rates.

Is debt consolidation right for me?

It depends on your total debt, interest rates, credit score, and payment capability. It's suitable if you can pay off your debt within five years and secure a lower interest rate than your current debts.

Should I consider long-term financial planning?

Yes, debt consolidation should be part of a broader financial strategy including budgeting, cutting expenses, and building an emergency fund.

How do Chapter 7 and Chapter 13 bankruptcies in California differ?

Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows debt restructuring over a set period, usually three to five years.

Can my spouse's bank account be garnished for my debt?

Bankruptcy laws offer protections against such actions, but specifics depend on individual cases and state laws.

How can I learn more about my options?

Consulting a California bankruptcy attorney can provide clarity. Firms like The Law Offices of Christopher Hewitt offer free consultations to explore debt relief paths.

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