Get Out Of Debt

Medical bankruptcy is one of the most misunderstood terms in medical finance. There is actually no “medical bankruptcy”. That being said, medical problems have consistently been one the 3 leading causes of bankruptcy in the United States.

Although there is technically no medical bankruptcy a medical problem can certainly cause you to find yourself in bankruptcy court. Medical problems can be a double whammy; they reduce or eliminate your income and cause you to incur massive debt. In many cases you have virtually no chance of ever repaying this debt, it’s just too large. Many people find themselves in a position of losing their homes and other valuable possessions in an attempt to repay their huge medical bills.

Often, seeking the protection of bankruptcy isn’t something desirable but it’s seen as the only way out. You may think that having health insurance will provide protection against such a financial calamity, however almost 50% of all bankruptcies are caused by people facing massive amounts of medical debt even though they had medical insurance at the time of their accident or illness.

Sadly, there are also a significant percentage of medical related bankruptcies that are filed by people that aren’t really facing huge medical bills. Almost 40% of medically related bankruptcies were filed by people who owed $5,000 or less in medical bills. In many cases this is due to the medical industry being much more aggressive in collection actions than they once were. In other cases people are just not educated about how to proceed in such cases. Once the collection letters begin arriving, fear sets in, and many people just don’t look at all their options.

Yes, filing a chapter 7 bankruptcy can protect your assets and allow you to keep your primary residence if your home falls within state guidelines. These vary by state. Filing for bankruptcy protection however, is can present you with huge problems down the road and will essentially destroy your credit rating. You should carefully consider your other options before considering using bankruptcy as a shield to protect you from medical bills.

You might consider calling an attorney in your state that specializes in such matters. Your first call however should be to your creditors. The first line of defense should be making arrangements for some sort of alternate payment plan. Bankruptcy is a messy business and most creditors would rather avoid is almost as much as you would.

Bank debt consolidation loans allow you to consolidate all your debts into a single bank loan debt. These loans are useful ways to reorganize and then get rid of debts because they have comparatively less interest rate than most debts. Consolidating various debts to a bank loan will result in low monthly payments and an extended period for payoff of the debt. These bank loans often do not have any late fees. These are the reasons that make bank debt consolidation loans quite popular nowadays.

Most of the bank debt consolidation loans are secured loans, therefore you need collaterals. The type of collateral and its value are determined by banks. Common collaterals include home, vehicle, real estate properties, insurance policies and other benefits. Many banks offer debt consolidation loans on the basis of the customer?s savings account. Most of these loans are provided to persons with average or above average credit rating. But in a few unique circumstances, banks provide loans to even poor credit persons and persons lacking established credit.

Bank debt consolidation loans cover almost all unsecured debts such as credit card debt, past medical debt, service charges, personal loans, store bills, gas bill, departmental store debts and certain installment loans. There may be different types of bank debt consolation loans to fulfill different needs. The interest rates for these loans vary considerably, depending on the credit rating of the debtor. The better the credit rating of a debtor is, the lower the interest rate of the loan. Usually the rates fall in the range of 10% to 13%. The loan amount ranges from $2,000 to $100,000.

Applying for bank debt consolidation loans is easy. A debtor can apply online using his secure loan application, or approach directly through customer service representatives. Most banks need a cosigner, a qualified person who guarantees payments. In order to qualify for most bank debt consolidation loans, you have to close your credit cards and other related debt accounts. Before applying for a loan, it is wiser to look at as many plans as possible and select one with low interest.

Taking a bank debt consolidation loan may actually improve your credit rating as the creditors realize that you are making a good effort to repay the debt. However, it is to be kept in mind that these loans never eliminate debt, only reduce it. A debtor will still have to make his monthly payments regularly.

Debt is something everyone lives with in some way, shape or form. Much of the debt load a person has is based upon a specific level of income. When that income stops or debt load becomes too high, payments may fall behind and the debtor is forced to try and regain some financial foothold on life through bankruptcy. Other reasons often include student loan debt and medical debt.

Life is all about balancing income and expenses. While many people have a firm hold on their bills, emergency expenses, loss of a job or medical bills can quickly force finances out of balance. Secured debt, like cars and homes, are the hardest hit because lenders do not care about why the bills are not being paid, just that their property is sitting out there worthless to them unless those bills ARE paid. With foreclosures and repossessions on the horizon, a bankruptcy claim may be the saving grace of a person or family.

Taking a look inside the life of financial turmoil can better explain why people choose to make a bankruptcy claim. Imagine the phones ringing off the hook day and night with creditors wanting the money they are owed. Many of these creditors will work for companies providing unsecured credit which means they will talk hard and fast trying to reclaim their money. No physical property is attached to unsecured debt, so no matter how many times you tell them you cannot pay the bill, they will continue to call hour after hour.

Once bills have gone unpaid for an extended length of time, creditors have the right to file legal cases for payment against the debtor. Or, they can choose to sell the debt to a collector that works every day recovering money. If the debt is part of a court case, the debtor risks losing property and income. This is not to mention other legal ramifications like the loss of a job if security clearance is required. Car insurance, phone, cable, gas and electric companies all check credit ratings before allowing new utilities or insurance to be set up.

Now, the debtor is receiving calls 24 hours a day, they cannot work and they have no utilities in their home because of bad credit scores.

Filing a bankruptcy claim is often a last resort for the debtor. Life unbalanced by debt and financial obligation is life in turmoil. Bankruptcy can protect secured debt property and remove the weight of creditors calling all the time. Whether debt is liquidated through Chapter 7 or restructured with Chapter 13, there is some relief from the financial hole the debtor has been living in for so long.