A misconception about the older-aged wealthy is that they don’t have financial troubles. On the contrary, many wealthy people spend beyond their means in middle age or take on heavy debt that they subsequently find difficult to pay off. Because credit lines are higher for those with higher incomes, heavy credit card debt is common. As you get older, it is also more common to experience significant medical problems, necessitating more frequent appointments with the doctor and more hospital stays. This increased medical attention can lead to significant debt. If you find yourself carrying a greater debt burden than you can handle, retaining a knowledgeable Sherman Oaks bankruptcy attorney can help ensure you file the right kind of bankruptcy to reach your financial objectives.

Credit card debt can become insidious because most people’s income remains the same even as debt in the form of additional purchases, interest, and fees continues to accrue, sometimes on multiple cards. Depending on your income and objectives, you may be able to file either Chapter 7 or Chapter 13 bankruptcy to get rid of unsecured debt such as credit card or medical bills. When a debt is unsecured, this means that a creditor has no property or other item to repossess if you fail to pay off the debt you accrue.

Types of Bankruptcy

A Chapter 7 bankruptcy wipes out credit card debt and medical debt entirely. You must pass a means test to qualify for Chapter 7 bankruptcy. If you do not have sufficient assets or property, you may not be able or required to repay creditors at all. On the other hand, if you do have more money or equity than the law will allow you to exempt, then it is possible (but not certain) that a bankruptcy trustee will sell some or all of your assets and use the proceeds of such a sale to help pay some or all of your debts in order of priority. Usually credit card debts and medical bills are among the lowest in priority.

A Chapter 13 bankruptcy will sometimes require you to pay off a portion of your credit card and medical debt using a debt repayment plan that must be approved by the bankruptcy court and completed in 3-5 years. As with Chapter 7 bankruptcy, Chapter 13 triggers an automatic stay. This stops the accrual of late fees and interest on your credit cards. It also stops harassing phone calls from collection agencies related to your credit card or medical debt. If you make timely payments on this plan for 3-5 years, the remaining debt will be discharged and you will be able to start over.

If you are facing mounting debt from medical bills, credit cards, or other expenses, bankruptcy may be a good way for you to get back on your feet financially. Contact the knowledgeable Sherman Oaks bankruptcy lawyer Devin Sawdayi at 310-475-9399 or via our online form for confidential help in considering or filing for bankruptcy.