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Edmonds Bankruptcy Law Blog

Which debts are non-dischargeable in Chapter 7 bankruptcy?

Washington consumers who are experiencing financial instability because they have no stable employment may benefit from the protection of personal bankruptcy. Chapter 7 bankruptcy may also be referred to as a liquidation bankruptcy, and while it will discharge most unsecured debts, non-exempt assets will be liquidated, and the proceeds distributed to creditors. However, some debts will not be discharged, and creditors may claim that a particular debt is non-dischargeable.

The debt categories that will not be discharged include most taxes, spousal support and child support. If a creditor claims that a particular debt should not be discharged, a complaint will have to be filed with the Bankruptcy Court. Reasons for a debt to be found non-dischargeable include debts obtained fraudulently, such as providing false financial information, or any other false pretences or representations. For example, if a person uses loan funds intended for home improvements to finance a vacation, or obtains a bank loan by providing inaccurate income and asset information, those debts may not be dischargeable.

With consumer spending growth comes credit card debt

Consumer spending tendencies are measured by analysis of credit card debts, and the latest figures apparently show a rapidly improving economy. However, the analysis indicates that a significant percentage of consumer spending is done with credit cards. While this fuels economic growth, it may lead to more consumers in Washington and other states considering Chapter 7 or Chapter 13 bankruptcy due to overwhelming credit card debt.

A new study shows that American consumers spent 35 percent more on their credit cards from the 2013, third quarter, through the third quarter in 2014. The results indicate that during the past five years, only the third quarter of 2011 showed higher figures of credit card spending. The amount of debt accumulated by consumers has shown a constant growth over the past four quarters, compared on a year to year basis.

Records show public hospitals sue patients for medical debt

The purpose of a public hospital is to provide care that is paid for by government funding, which is the majority of care providers for the un- and under-insured. Since these medical care institutions are considered non-profit, it may be surprising to learn that some of these hospitals are aggressively pursuing payments for medical debt from some of their poorest patients. A recent report attempted to expose some of the problems that poorer patients have experienced with some of these health care facilities. While none of the medical facilities included in this report are located in Washington, there may be many residents here who are struggling to pay medical and other bills. However, there are options -- including bankruptcy -- for dealing with these overwhelming debts.

Research was conducted on the efforts these hospitals put into trying to collect unpaid bills. Reportedly, some of these facilities are not reluctant to seek remuneration through wage garnishments and bank account seizures. A few hospitals in particular seemed to be more willing to take their poorest patients to court.

Tags: Medical Debt

Man behind fraudulent mortgage debt relief scam shut down

When the housing market collapsed approximately six years ago, many homeowners found themselves in over their heads as they tried to make mortgage payments they could not afford toward a balance that exceeded the current value of their homes. As a result, some Washington families may have wound up losing their homes to foreclosures. To make matters worse, there were several unscrupulous individuals who set up fraudulent businesses in an attempt to take advantage of those who were struggling to keep up with their mortgage debt.

Even though the housing market is recovering from the severe downturn, the Federal Trade Commission (FTC) is still attempting to process all of the claims related to fraudulent relief agencies that scammed homeowners during the crisis. One man and his companies have been shut down after purportedly collecting hundreds of thousands of dollars under false pretenses. He was reportedly operating several companies named in a way to convince victims that his offers were approved by the government.

Tags: bankruptcy, homes

Couple wins suit against bank for its loan collection efforts

Many homeowners found themselves underwater in their mortgages when the housing market collapsed several years ago. As a result, many families likely experienced difficulties keeping up with their mortgage payments and had to endure harassment from their lender's loan collection efforts. A federal judge recently ordered Bank of America to pay a couple after refusing to honor their no-contact request. Since this bank has customers throughout the country -- including here in Washington -- readers may be interested in learning more.

This couple had a mortgage through Countrywide. When the housing bubble deflated, they -- like thousands of other homeowners -- found that they could not keep up with their increased mortgage cost when Countrywide was absorbed into Bank of America. This lending institution then began making so-called "robo-calls" to the couple's home and cell phone lines beginning in 2009. A few months later, they contacted a third-party mediation company in an attempt to negotiate a loan modification.

Tags: bankruptcy

20 Percent of all U.S. citizens face unpaid medical debt

Washington residents who are hospitalized due to illness or an emergency following an accident commonly end up facing medical bills that were not anticipated. One never knows what the extent of the expenses will be, and many people are completely overwhelmed by the resulting medical debt. The Consumer Financial Protection Bureau recently announced that 20 percent of U.S. citizens failed to pay medical bills in 2014.

The report revealed that almost 50 percent of those with unpaid medical bills have no other significant debts. The Bureau suggested that many consumers fail to understand the bills and notices sent out by the hospitals and insurance companies. Unfortunately, failure to settle medical bills can have dire consequences, such as lowered credit scores. Low credit scores will affect other aspects of their lives because they will have difficulty obtaining financing for homes and cars.

Tags: Medical Debt

Change in policy may help some who lost a home to foreclosure

Several years ago, the housing market crashed and sent prices and property values tumbling. As a result of the severe downturn, many families in Washington lost their homes to foreclosure. Fortunately, some of those families may now have a chance to buy back their homes due to a new policy.

Under the previous policy, those who lost a home that was financed through Fannie Mae or Freddie Mac would have been required to pay the remaining balance of the mortgage, in full, if they desired to repurchase the house. However, the current regulator in charge of both agencies has announced that homes could now be repurchased for the current market value. This is a decided change from the old policy that negated a reduction in the principal amount owed.

Tags: bankruptcy, car, homes

Agency fines used car dealer over loan collection efforts

Four years ago, Senator Elizabeth Warren advocated for the creation of a new agency to help protect consumers from predatory lenders. The agency, The Consumer Financial Protection Bureau, has now fined a used car dealership over its loan collection efforts. While this particular dealership does not have locations in Washington, residents here may have financed cars through similar businesses.

According to the records, the agency investigated the company, DriveTime Automotive Group, Inc., over its alleged harassment of its customers who were reportedly in arrears on their accounts. The company is one of the largest used dealerships with the option to "buy here and pay here" in the nation. Many have equated this practice with other types of sub-prime lending.

Tags: bankruptcy, car

When healthcare results in crushing medical debt, you need help

There are some things that money cannot buy, such as happiness and family relationships. Most other things in life come with a cost, including healthcare. Many Washington families struggle with medical debt in addition to other ongoing expenses.

Over the past few years, healthcare costs have taken a bigger bite out of almost every family's budget. Having insurance is no shield against rising medical debt. In fact, many insurance policies cover even fewer procedures than in the past. This means you may now be personally responsible for more of your family's healthcare needs than before.

Tags: filing for bankruptcy

Consumer debt preventing many from entering housing market

The American dream usually consists of a perfect home with a white picket fence. Unfortunately, that dream is a reality for the lowest number of homeowners since 1987. A recent study conducted by RealtyTrac seems to point to various types of consumer debt as a potential cause for the low numbers. Prospective home buyers in Washington may be held back for this same reason.

The report is based on research done in 500 counties across the country. It concludes that student debt and vehicle loan debt, along with other types of consumer debts, have negatively impacted the ability of new buyers to enter the housing market. One financial professional has suggested that lowering the required down payment from 20 percent to 3 percent may enable buyers to save the money they need sooner. However, even if the amount required for a down payment were reduced, buyers with non-mortgage debt would only benefit in 48 percent of the total 500 counties due to the increased monthly payments that result from smaller down payments.

Tags: bankruptcy

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Richard J. Shurtz, Attorney at Law
7017 196th Street, S.W.
Lynnwood, WA 98036

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