Stratford Bankruptcy Blog

Seeking medical care when sick or attending regular appointments for health care prevention is important for the health and vitality of people living in Connecticut. Unfortunately, some people choose to forgo getting necessary medical attention because they are scared of what comes after -- bills. This fear is far from unfounded. Medical debt is a growing problem, although one that can be addressed through bankruptcy.

Approximately 43 million people in America have unpaid or past due medical debt that is negatively affecting their credit scores. Unpaid medical bills account for about half of all overdue debt in the U.S. While medical debt can slowly build up over time due to smaller expenses, much of the overdue bills are related to larger, unexpected care. Ambulance rides and hospital stays are common sources, as is receiving care from doctors who patients believed were in-network but turned out to be not.

Filing for bankruptcy is a way for people in Connecticut to address their debts that they can no longer repay. However, the process is much more involved than simply filing and then waiting for debt to disappear. There are generally two types of personal bankruptcy that consumers can use -- Chapter 7 and Chapter 13. Here are a few things that may help individuals better understand the process of personal bankruptcy.

To file for Chapter 7, a person must pass the means test, which assesses his or her debts, incomes and assets. If that individual passes the test it usually means that he or she does not earn enough to be able to repay the debts. Any qualifying debt can then be discharged, giving that person a fresh financial start. However, it also means that valuable assets like cars or jewelry may be sold to satisfy some of the creditors.

The current unemployment rate in America is relatively low, but that does not mean that some Connecticut consumers feel confident about the future. Reducing debt is a priority for many people right now. However, some people may struggle more than others when it comes to paying off debts. For these individuals, bankruptcy could be a smart choice.

Consumer confidence in the economy is waning, although that may simply be part of an ongoing cycle. Attitudes toward things like purchasing vehicles and homes appear to move cyclically, and positive attitudes are currently declining from a recent peak. In fact, many people are more worried about the future of the economy despite the low 3.7% unemployment rate as of July 2019. This means that consumers are working toward not just decreasing debt, but also building up savings.

There is perhaps nothing inherently wrong with having a credit card. Some Connecticut consumers use credit cards to improve their credit scores, or to make specific purchases in order to earn reward points. Paying off the balance every month is often important to maximizing these benefits. Unfortunately, it is easy to end up carrying increasingly larger balances from month to month. As millennials struggle with growing balances, some may find that bankruptcy can be an effective tool for handling overwhelming amounts of debt.

Between 2008 and 2012, Only 41% of millennials used credit cards, but now that figure has jumped to 52%. The increased popularity of credit cards among millennials is not particularly concerning, but how they are managing those accounts is. In the first quarter of 2019, 8% of this generation's credit card balances were considered seriously delinquent, more than any other age group. A total of 60% of adults aged 18 to 34 either carry large balances, shell out for late fees or engage in costly behaviors with credit cards. The average credit card interest rate is approximately 17%, so carrying a balance and falling behind on payments will only add to a person's debt load.