Bankruptcy

The cost of health care remains a major concern for nearly all Americans, and there is still no shortage of health care related news coverage. Since this post was originally published in 2017, the health care debate has changed. The Affordable Care Act a/k/a “Obamacare” remains in place, the Health Insurance Marketplace remains active, and many current questions focus on coverage, premiums, deductibles, out-of-pocket costs, and the future of premium tax credits. Regardless of what happens in Washington, D.C., medical bills and other health care costs continue to be a major expense for many Americans. At times, these costs can be overwhelming.

I get asked all the time by clients and potential clients whether a collection email or call is legitimate.  This is an example of a document emailed to a client who wanted to know if this was legitimate or not.

One of the things that I have seen cause confusion for my clients is the fact that the debt owed to the creditor and a lien created to secure the payment of the debt are not the same thing. Clients find it hard to absorb the concept that a debt can be discharged in bankruptcy but a lien can survive the discharge and continue to cause later problems. 

The answer is usually no.  The amount that each debt is paid is determined on a case by case basis and in some circumstances, certain debts are not paid back at all. Instead, these debts are discharged upon completion of the case. There are many different factors that go into determining what debts must be paid. Let’s go over a few.