Podcast #11: Mortgage And Medical

Disclaimer

While the information given in this podcast is instructional, it is not intended to be taken as legal advice for your particular legal or financial situation. The recommendations that we give to one person may not be appropriate to your particular situation. The information contained in these podcasts is also not intended to replace the advice that you would receive from an actual consultation with a competent legal professional practicing in the area of consumer bankruptcy law.

Welcome

Welcome to morsebankruptcy.com, the podcasts. I’m Todd Morse owner of Morse Law. On this podcast we handle variety of legal issues related to bankruptcy from various sources but this podcast in particular deals with a questions that are asked by visitors to our website. Usually these are the first question they are asking when they are looking into the possible bankruptcy filing.

Viewer Question

This visitor asks or writes my husband had medical issues over a year ago and we owe a large number of medical bills, credit cards and now we are in the early stages of foreclosure. We need to find out our option for filing bankruptcy.

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This is actually, as terrible as it sounds, it’s actually a pretty common scenario to take place before somebody comes in for a bankruptcy consultation. It’s not like what you might think when you first read it. Where the person yes had a medical condition so they have medical bills but strangely at the same time running up credit cards on lord knows what and not paying their mortgage. It’s all very linear. It’s very logical. The person has some type of medical condition. It’s probably impaired him for working and in the time that they are off they probably had to lean on their credit cards like they never have before. Not for stereos and TVs, but we are talking gasoline and groceries and things of that nature. And then once the medical condition resolves itself, they are cured or they are treated and they are back to work, they are trying to handle these credit cards that they used to bridge a gap.

The second they think they have a handle on that, here come the medical bills from getting cured and it’s just a one two punch that very few households can survive. And so while they are dealing with the nastiness of the medical bills and credit cards with the ever increasing interest rates. Next thing you know the largest bill, the most important one in the household, the mortgage, there’s not enough money to make it once or twice or three times. Once you start going down that route, alot of times people start wondering why I am paying this mortgage if the house is just going to get taken away from me anyway.

There is always a period in there where they simply do not know what their options are, they do not know what they are facing and quite frankly they don’t know if they have any help of getting out it anyway. Which also a pretty good example of why it’s so important to talk to somebody whether it’s a financial planner, consolidation company or bankruptcy attorney may be all three just to make sure you are not getting a biased answer but you do need to talk to somebody if only to realize that there are ways to deal this and there is no reason to think that you are at a hopeless stage and to just let the things continue to accrue and rack up against you

So now in this particular situation we got a couple of things. They are early stages of foreclosures so that’s probably were we addressed first, the house is the first key. Now if they have decided that they just going forward may be the medical condition has left them with a lower income going forward than they had before they know that they will never be able to afford this house in that case we just treat the house like we would treat the credit cards and medical bills. It’s something that we need to make sure doesn’t hurt them in the future and we can probably do that which is chapter 7 filing surrender the house, discharge the possibility of a deficiency judgment that kind of thing.

But now if they are fully recovered, the household’s income is going to be the same and they just, you know, go figure, want to get back to where they were before the medical condition basically robbed them up their lives then we are looking more at chapter 13 filing where we can take the missed payments on the home spread those out over a considerable amount of time, So you are not being forced to pay all at one time and then deal with the credit cards and the medical bills with the 13 as well.

So what we have here are home arrears which are something that if you going to keep the home due have to be paid back but can be spread out over a 13 and then we have these medical bills and the credits cards which under either chapter or not priority creditors they are capable of being discharged it’s just a question of whether we’re going to fully discharge. I mean a chapter 7 or maybe pay some percentage of chapter 13 but to save the house.

So as unfortunate this situation appears to be. There is really no reason for this folks to lose hope I mean they just need to decide what it is that they in their household can reasonably expect to do with this house going forward in their lives and then file the proper chapter of bankruptcy that puts them in that position. So it’s an unfortunate situation but it does bring up several very interesting bankruptcy issues and for that reason it’s very good question.

Prerequisites

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