This may not be a question that many people ask themselves, but the answer is important for people to know so they can better understand what bankruptcy is and why it exists.
Perhaps the first mention of bankruptcy--well at least the concept of it--is actually be found in the Bible. Deuteronomy/Exodus 15:1-2 says: "At the end of every seven years you shall grant a release...every creditor shall release what he has lent to his neighbor, his brother..." Throughout history, many laws, in many countries have been based on various religious teachings, including the Bible. The above Bible verse seems to lean in the favor of debtors, but debtors were not always treated with such understanding.
The word bankruptcy is derived from the Italian word "banca rotta" meaning broken bench because early tradesmen who couldn't pay their debts had their work benches broken as punishment. Debtors were also treated quite poorly throughout Roman and Medieval times. From the mid 1500's- the mid 1800's, various laws were enacted throughout Europe. One of the first, if not the first European laws to use the word "bankrupte" was enacted in 1542 under the rule of Henry VIII.
"Modern" bankruptcy law didn't arrive in the United States until 1841 when the first voluntary insolvency laws were enacted (the laws up until this point were laws that provided for the punishment of debtors rather than relief to them). From 1841-1978 these bankruptcy laws evolved and laid the foundation for The Bankruptcy Reform Act of 1978 which is the first true modern bankruptcy law that tried to balance protections for both debtors and creditors.
In 2005, Congress revised the 1978 law by enacting The Bankruptcy Abuse and Consumer Protection Act (commonly referred to BAPCPA-"bap-see-pa"). Many bankruptcy practitioners and judges are critical of BAPCPA and say the law is more complicated, unclear, and slants more in favor of creditors than the prior modern law. This criticism aside, filing for bankruptcy under the current law of the land, BAPCPA, is still a hugely beneficial tool to people who would otherwise find themselves hopelessly buried in debt. With BABCPA--there's not only hope--there's a solution for many of these people. Morgan Spah is a Minnesota bankruptcy attorney and senior associate at Drewes Law, helping many clients navigate bankruptcy and bankruptcy-related issues. She can be reached by email at email@example.com
Here is an excerpt from a recent article titled :"5 Stupid Ways to Pay off Your Debt-Expensive and Credit-Score Damaginig Ways to Get Out of Debt",
written by LaToya Irby on About.com. DON'T! 1. Borrow from your 401K.
You shouldn’t borrow from your 401k (or any retirement account)...to pay off your debt. Let’s talk about what happens when you borrow from your 401K. First, your employer may not let you contribute to it anymore until you’ve repaid the loan. Second, your take home pay is less (because you have to pay back the loan) until the money’s paid back. Third, if you leave your job, you’ll have to pay the entire loan immediately or you’ll end up with early withdrawal fees and income taxes.2. Refinance your mortgage
Another bad idea, especially if your debt was unsecured to begin with. Tying bad debt to your home’s equity isn’t smart. When you couldn’t pay your credit card debt, you ended up with a trashed credit rating. Securing your debt with your home means you lose your home and get a trashed credit rating when you can’t make payments.3. Debt settlement
Though they seem like refuge in a troubled situation, debt settlement companies tend to make the situation worse. For the scheme to work, you have to stop paying your creditors. When the payments stop, the phone calls start and so do the negative credit report entries. Thirty days late, sixty days late. Before long your account’s charged off and your credit score is trashed. In the end, the may not agree to a settlement proposed by your company. Imagine going through all that and still owing the money.4. Consolidate with a high interest loan
Debt consolidation may be a solution if you can get a loan at the right terms. If the only loan you can get has a higher interest rate than the average of your credit card debt, leave it alone. Your monthly payments may look lower, but that’s only because the loan is spread over a long repayment period. If you add up the interest you’d pay over the life of the loan, you’ll see that you’re spending more money than if you hadn’t consolidated with that loan.5. Transfer your balances to other credit cards
Transferring balances to credit cards with those low introductory rates only makes sense when: you are financially able to pay off the balance before the introductory rate expires and you will not use the card to make purchases or take out cash advances. If you can’t transfer the balance under those conditions, it won’t work for you. And, forget about shuffling your balance to a new credit card with a new teaser rate, the balance transfer fees negate the interest savings.Morgan Spah is a Minnesota bankruptcy attorney and senior associate at Drewes Law, helping many clients navigate bankruptcy and bankruptcy-related issues. She can be reached by email at firstname.lastname@example.org
According to a recent CreditCards.com poll , credit card debt is the # 1 taboo topic that poeple avoid discussing with each other.
Although this poll reflects an understandable sentiment held by many people, discussing the topic of credit card debt can be
cathardic--especially when people realize they are not alone in their struggle with credit card debt.
Nonetheless, the findings and article posted on CreditCard.com are interesting.
Keep reading below for an excerpt from the Creditcard.com article.
"According to the old saying, you shouldn't talk about religion or politics in polite company. Add one more to the list of conversational taboos: Credit card debt. That's the topic people are least likely to want to talk about with someone they just met.
The only other topic that makes people hold their tongues that much? Details of their love lives. Americans are more comfortable talking about politics, their religious views and their ages than they are talking about how much debt they carry on their credit cards, according to a new poll conducted for CreditCards.com.
The poll also found Americans less willing to talk about their debt than they were five years ago, when the recession was just beginning to take shape. About 85 percent of Americans said they are reluctant to chat about their credit card debt with someone they first met, compared to 80 percent who gave the same answer in an identical poll conducted in 2008."
*****************************************************************************At Drewes Law, PLLC, your initial consultation is always free...and always valuable!Morgan Spah is a Minnesota bankruptcy attorney and senior associate at Drewes Law, helping many clients navigate bankruptcy and bankruptcy-related issues. She can be reached by email at email@example.com
YES! Drewes Law, PLLC, always offers a free initial consultation at our office.
Perhaps you've heard the adage that "Free advice is worth every penny you pay" in other words, free advice is useless.
Well, we at Drewes Law, PLLC don't believe that is always true. We believe that it is important to encourage people to come and visit with a well qualified and competent attorney to discuss possible solutions to their financial problems so they can make well informed decisions about their financial future.
These days, there is a lot of information available (free!) online about bankruptcy. The problem with having all of this free information available is that people mistake information for advice. Legal information can be dangerous if it is not supported with competent legal advice, so this is one reason Drewes Law, PLLC offers free initial consultations for all of our practice areas, including bankruptcy.
Another reason we offer free initial consultations for bankruptcy is that we understand that coming to the realization that it is time to visit with a Minneapolis bankruptcy attorney can be a difficult. It can be even more difficult to bring yourself to actually go and consult with a Minneapolis bankruptcy attorney if you're worried about getting a bill when you walk out the door from your consultation. At Drewes Law, PLLC you don't have to worry about being surprised with a bill after your consultation.
At Drewes Law, PLLC, your initial consultation is always free...and always valuable!Morgan Spah is a Minnesota bankruptcy attorney and senior associate at Drewes Law, helping many clients navigate bankruptcy and bankruptcy-related issues. She can be reached by email at firstname.lastname@example.org
In the last bankruptcy law post we discussed What are Bankruptcy Exemptions?
and redefined "bankruptcy exemptions" to mean "asset protections". So then what is an asset?
The bankruptcy law doesn't define the term "asset" in the definition section of the law. Defining that word for clients is left up to bankruptcy attorneys.
The Merriam-Webster dictionary defines an asset as "the entire property of a person, association, or corporation, or estate applicable or subject to the payment of debts."
Well...that definition doesn't clear things up so lets try it another way.
If you can sell
it, or save
it--then it is an asset!
The bankruptcy law requires you to disclose on your bankruptcy papers all of your assets. It doesn't matter if it was given to you, or you found it, or if its worth just a penny. If you can sell
it, or save
it--then it is an asset!
With that basic definition of what an asset is lets take a look at some of the different types of assets that you can have, because you DO have assets. Everyone who files bankruptcy has assets of some kind. I've never had a client yet who has had no
assets. Real Property (more commonly known as "real estate")
Basically, real property consists of houses/cabins/structures on land and just land.
Just as vehicles have titles that list who owns the vehicle, real estate has deeds or certificates of title that show who owns the real estate. Generally, if your name is on the deed to the real estate, even if your name is listed with some other person(s) then you have at least partial ownership of that real estate and it is an asset of yours. It is an asset of yours even if you don't live there or never go there. If you're unsure if you have real estate, your bankruptcy attorney can help you investigate that. Personal Property (more commonly known has "stuff")
Here is a list of common "stuff" people have that needs to be listed as assets:
- Cash on hand
- Checking/savings accounts
- Household furnishings
- Sporting/hobby equipment
- Mutual funds
- Retirement accounts/pensions
- College savings accounts
- Hot tubs/pools/pool tables
Here is a list of common assets people have that they don't always remember they have:
- Life insurance policies
- Tax refunds from prior years that are owed to you
- Tax refunds from the current year that you will get next year
- Any money owed to you (loans you gave to friends/family; even renters deposits)
- Accounts receivables owed to you or your business
- Money you are entitled to receive in the future (This one can include a lot of things like: money you could get from a personal injury lawsuit if you were hurt before your bankruptcy; back alimony or child support; royalties from a book you published before your bankruptcy.
Even though you are required to list all of these assets in your bankruptcy papers you still have those bankruptcy exemptions
("bankruptcy protections") to help you keep most, and usually all, of your assets.
So remember: If you can sell
it, or save
it--then it is an asset! Morgan Spah is a Minnesota bankruptcy attorney and senior associate at Drewes Law, helping many clients navigate bankruptcy and bankruptcy-related issues. She can be reached by email at email@example.com
If you are contemplating filing a bankruptcy and are doing research about the process or talking to a Minneapolis bankruptcy attorney it won’t be long before you encounter the words “bankruptcy exemptions”.
The words “bankruptcy” and “exemptions” can be intimidating words when used individually and even more intimidating when used together. So, lets fix that by replacing the words “bankruptcy exemptions” with the words “asset protections” because that’s exactly what they are. Bankruptcy exemptions are asset protections. (Look for a later post about “What is an asset?”)
But what are we protecting your assets from? In chapter 7 cases, we are protecting your assets from being liquidated (sold) to pay your debts. In chapter 13 cases, we are using asset protections to help minimize the amount of money that you have to pay into your chapter 13 plan.
Another way to understand the concept of bankruptcy exemptions (asset protections!) is to visualize a room full of cardboard storage boxes that are all different sizes. Each box has a label on it to indicate what can be stored in the box (i.e. equity in your house, household goods, clothing, jewelry, vehicle, retirement account, etc.). Each of these storage boxes represents a bankruptcy exemption (asset protection!) and the size of each box represents the value limit of what can be stored (protected) in the box. The goal is to “store” as many, if not all, of your assets in these boxes.
The majority of people
who file for bankruptcy in Minnesota fit all of their assets into these boxes and protect all
of their assets. Before you file your bankruptcy case, your Minneapolis bankruptcy attorney should be able to give you a good idea of whether all of your assets will be protected and what options are available to you.
Morgan Spah is a Minnesota bankruptcy attorney and senior associate at Drewes Law, helping many clients navigate bankruptcy and bankruptcy-related issues. She can be reached by email at firstname.lastname@example.org
Bankruptcy laws exist to give honest individuals and businesses get a fresh financial start. Abraham Lincoln is perhaps one of the best examples of why bankruptcy law exists. Abraham Lincoln was honest, hardworking, intelligent, and entrepreneurial, but still found himself bankrupt. Abraham Lincoln purchased a general store in 1832. By the end of 1835 business was bad, his business partner had died, and the future President of the United States was forced into bankruptcy by his creditors. But-- that was not the last the world heard from Abraham Lincoln--who went on to become an activist, lawyer, politician, husband, father, and 16th President of the United States of America. Morgan Spah is a Minnesota bankruptcy attorney and senior associate at Drewes Law, helping many clients navigate bankruptcy and bankruptcy-related issues. She can be reached by email at email@example.com
According to a recent national report
on bankruptcy filings, 1,261,140 bankruptcies were filed in United States courts over a 12-month period ending September 30, 2012. In Minnesota alone during the month of February 2013, as many as 1107 Minnesota bankruptcy cases
were filed. If you are considering bankruptcy as a means to stop debt collectors and get a fresh start going forward, you are certainly not alone.Morgan Spah is a Minnesota bankruptcy attorney and senior associate at Drewes Law, helping many clients navigate bankruptcy and bankruptcy-related issues. She can be reached by email at firstname.lastname@example.org
The TIME cover story this week, "Bitter Pill: Why Medical Bills Are Killing Us"
by Steven Brill, is an exhaustive exposé on the twisted world of medical expenses and the enormous effects they have on both individuals and the country writ large. At Drewes Law we see their effect on people every day: 60% of those who go bankrupt do so because of medical bills, and most of those folks who do have insurance. Big picture, the country overpays its medical bills by about $750 billion (with a 'b') every year. That's more than the cost of the entire Medicare program.
At the root of the problem are hospitals' administrations, which, with absolutely stunning regularity, double- and triple- bill patients for the same items at extravagant mark-ups. The hurt compounds down the line of production as pharmaceutical and medical device manufacturers sell their devices for several times the cost of research, design, and manufacturing. Even routine visits can break the bank, as doctors order unnecessary tests and procedures to avoid malpractice suits as a matter of practice-- billed of course at double the price, triple the price, and beyond. All of this is invisible to the consumer, who generally entered the "market" against their will and in a state of emergency, and who sees no bill until after the care-- if they see one at all.
Here is an annotated look at the article's introduction, which details a standard encounter with an oncologist:
When Sean Recchi, a 42-year-old from Lancaster, Ohio, was told last March that he had non-Hodgkin’s lymphoma, his wife Stephanie knew she had to get him to MD Anderson Cancer Center in Houston . . . [b]ecause Stephanie and her husband had recently started their own small technology business, they were unable to buy comprehensive health insurance. For $469 a month, or about 20% of their income, they had been able to get only a policy that covered just $2,000 per day of any hospital costs . . . .
His condition had worsened rapidly since he had arrived in Houston. He was “sweating and shaking with chills and pains,” Stephanie recalls. “He had a large mass in his chest that was … growing. He was panicked.”
Nonetheless, Sean was held for about 90 minutes in a reception area, she says, because the hospital could not confirm that the check had cleared. Sean was allowed to see the doctor only after he advanced MD Anderson $7,500 from his credit card. The hospital says there was nothing unusual about how Sean was kept waiting. According to MD Anderson communications manager Julie Penne, “Asking for advance payment for services is a common, if unfortunate, situation that confronts hospitals all over the United States.”
The total cost, in advance, for Sean to get his treatment plan and initial doses of chemotherapy was $83,900.
The first of the 344 lines printed out across eight pages of his hospital bill — filled with indecipherable numerical codes and acronyms — seemed innocuous. But it set the tone for all that followed. It read, “1 ACETAMINOPHE TABS 325 MG.” The charge was only $1.50, but it was for a generic version of a Tylenol pill. You can buy 100 of them on Amazon for $1.49 even without a hospital’s purchasing power.
Dozens of midpriced items were embedded with similarly aggressive markups, like $283.00 for a “CHEST, PA AND LAT 71020.” That’s a simple chest X-ray, for which MD Anderson is routinely paid $20.44 when it treats a patient on Medicare, the government health care program for the elderly.
Every time a nurse drew blood, a “ROUTINE VENIPUNCTURE” charge of $36.00 appeared, accompanied by charges of $23 to $78 for each of a dozen or more lab analyses performed on the blood sample. In all, the charges for blood and other lab tests done on Recchi amounted to more than $15,000. Had Recchi been old enough for Medicare, MD Anderson would have been paid a few hundred dollars for all those tests. By law, Medicare’s payments approximate a hospital’s cost of providing a service, including overhead, equipment and salaries.
On the second page of the bill, the markups got bolder. Recchi was charged $13,702 for “1 RITUXIMAB INJ 660 MG.” That’s an injection of 660 mg of a cancer wonder drug called Rituxan. The average price paid by all hospitals for this dose is about $4,000, but MD Anderson probably gets a volume discount that would make its cost $3,000 to $3,500. That means the nonprofit cancer center’s paid-in-advance markup on Recchi’s lifesaving shot would be about 400% . . .
When you look behind the bills that Sean Recchi and other patients receive, you see nothing rational — no rhyme or reason — about the costs they faced in a marketplace they enter through no choice of their own. The only constant is the sticker shock for the patients who are asked to pay.
This is only the beginning of a long journey deep into the underbelly of the American medical industry: the piece is 36 pages long and does not a word waste.
I would be remiss if I didn't provide an overview of the problem's full scope, as provided by Brill himself near the article's end:
Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. People fare differently according to circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid. If they’re not protected by Medicare or they’re protected only partly by private insurance with high co-pays, they have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow know the prices before they get billed for the services. They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to. How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate. They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice. They are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.
A comparison has been making its way around between "Bitter Pill" and Rachel Carson's Silent Spring, the 1962 exposé on pesticides that lead to the environmental movement of the 1970s and made environmental consciousness an enduring national issue. Silent Spring proved so convincing that within 10 years of its publication the federal government passed the National Environmental Protection Act, the Clean Air Act, the Clean Water Act, the Endangered Species Act, and created the Environmental Protection Agency. Modern data generally puts the number of lives saved by these bills in the millions, and the amount of money saved in the trillions.
One can only hope the reaction to "Bitter Pill," whether driven by consumers or legislatures or both, proves to be as loud and swift. For those who have experienced the tumult of expensive medical care, and especially
for those who have faced bankruptcy because of it, this is a must-read.Bennett Hartz is an associate attorney at Drewes Law, PLLC who specializes in defending against debt collection and foreclosure. He can be reached by email at email@example.com
Often times this is the first question on the minds of everyone who comes into our our office for their free consultation. Even before we discuss whether bankruptcy can help and how it can help--our potential clients want to know: how much does bankruptcy cost?
The answer is: it depends.
At Drewes Law, PLLC, rather than have the same set of fees for every client, we customize all of our fees based on each client’s individual circumstances. After having a thorough free initial consultation, our bankruptcy specialist will provide you with a specific bankruptcy fee quote based on the estimated amount of time it will take to prepare your case and get you through the process smoothly.
Most bankruptcy cases are billed on a flat fee arrangement. This means that rather than have the uncertainty of an open ended attorney tab, you will know what your case will cost before you make your final decision of whether to file bankruptcy. At Drewes Law, PLLC, our fees for a chapter 7 bankruptcy start at $1200 (plus the court filing fee of $306). This fee is for the less complicated cases. However, most cases have some type of minor complication or additional work required, for these cases, a more accurate range of fees to expect is $1500-$1800. Our office builds its business on word of mouth referrals so we strive to provide superior service for a fair fee with no hidden costs. Chapter 7 fees must be paid prior to filing your case. This is because you must include all of your creditors in your bankruptcy filing; even your bankruptcy attorney if you owe them money! The overall fees for a chapter 13 bankruptcy are somewhat less customized than a chapter 7 because the court has standardized the fees for most chapter 13 cases. The standard fees for a chapter 13 are $2500-$3000 (plus a $281 filing fee). What can be customized with chapter 13 cases is how much of the fees must be paid prior to the filing of your chapter 13 because it is possible for your attorney to be paid fees through the chapter 13 payment plan. Things to consider when getting information on the cost of filing for bankruptcy:
- All bankruptcy attorneys are not created equal. Bankruptcy cases can get complicated quickly. Look for an attorney that specializes in bankruptcy law.
- Beware of the bankruptcy attorneys who charge the lowest price. Now is not the time to bargain shop.
- Look for a bankruptcy attorney that customizes their fees, services AND strategy to your individual needs.
- A good bankruptcy attorney will cost money--but don’t forget what you will gain!!