Houston Bankruptcy Blog

Young people face mounting credit card debt

On behalf of Christopher Todd Morrison, P.C. posted in bankruptcy on Monday, June 10, 2019.

While many young people in Texas and across the country used to be known for avoiding debt, a growing number of younger Americans are facing difficulties repaying their credit card bills. According to a report by the New York Federal Reserve, overdue payments are rising among Americans age 18 to 29. Because millennials came of age during the financial crisis of the late 2000s, many of them have been hesitant to embrace significant debt. However, young people are also entering high-paying professional jobs, and they may feel better placed to pay off their credit card bills.

According to the study, credit card debt that was overdue by at least 90 days comprised 8% of the balances carried by younger people. There are a number of reasons why debt can stack up and go unpaid. While people may have signed up for their credit cards and accumulated debt while they were doing well financially, they may feel trapped after a job loss, medical crisis or other issue that has cut their income. In addition, credit card debt continues to rise. Interest rates are very high and have gone up as the Federal Reserve has raised the prime rate. Even people with good credit regularly pay rates of at least 18% on their balances.

How are tax return filings handled in bankruptcy?

On behalf of Christopher Todd Morrison, P.C. on Thursday, June 6, 2019.

If you have decided to file for bankruptcy, you may wonder what the proper procedure is for filing your income tax return.

Whether you opt for Chapter 7 or 13, you must file your tax return as usual, but the bankruptcy trustee will also file a return, which some people find confusing.

Patients look for medical debt solutions

On behalf of Christopher Todd Morrison, P.C. posted in bankruptcy on Wednesday, June 5, 2019.

For many people in Texas and across the country, treatment for a serious medical condition can be accompanied by financial disaster. Medical debt is a major burden affecting many Americans; it is one reason why people decide to file for personal bankruptcy. Even people with health insurance may face significant medical bills, especially if they require expensive prescription medications or specialized treatment provided by an out-of-network hospital. There are a few tips that people can keep in mind to help minimize their exposure to health care debt.

It is particularly important for people to fully understand their health insurance plans, especially if they are facing major medical treatment. This includes learning more about how insurers treat out-of-network providers and seeking out in-network physicians or hospitals whenever possible. In addition, people can focus on what they need to do to obtain coverage for specialist visits, imaging tests or other necessary steps in their treatment. Many insurance companies are quick to deny payment over paperwork issues, so patients can benefit from becoming strong self-advocates.

Cancer diagnosis can lead to serious medical debt

On behalf of Christopher Todd Morrison, P.C. posted in bankruptcy on Wednesday, May 29, 2019.

For people in Texas facing a serious medical diagnosis, debt may be a major concern. Medical debt poses a serious problem for far too many Americans, even those with health insurance. Around 20% of insured Americans continue to struggle to pay off medical debt. Many providers may be considered out-of-network, and the costs of prescription medication alone can skyrocket dramatically.

When people receive a cancer diagnosis, they may be as concerned about the financial and credit implications of their treatment as they are with the medical procedures that they are about to undertake. This is backed up by good reason: Cancer patients are more than twice as likely to declare bankruptcy as people who do not have cancer. Medical debt can be one significant contributor as costs can go up to $12,000 for just one lifesaving medication, and treatment costs average around $150,000.

Judgments and bankruptcy

On behalf of Christopher Todd Morrison, P.C. posted in bankruptcy on Thursday, May 23, 2019.

When individuals living in Texas file for bankruptcy, they typically do so because they need a fresh financial start. While most types of debts can be discharged in bankruptcy, there are a few exceptions. One type of debt that can be nondischargeable is a court judgment.

When one party successfully sues another in court, the judge enters a judgment for the plaintiff. The judgment is typically an amount of money that the defendant now owes the plaintiff. If repaying this debt proves unmanageable for the defendant, he or she may opt to file for bankruptcy.

Lawmakers propose bill to allow discharging student debt

On behalf of Christopher Todd Morrison, P.C. posted in bankruptcy on Tuesday, May 14, 2019.

Texas residents who are struggling with unmanageable student loan debt might be able to get some relief if a proposed bill is passed by Congress. The legislation has backers from both the Republican and Democratic parties.

Called the Student Borrower Bankruptcy Relief Act, the bill would make it easier for people to discharge their student loan debts in bankruptcy. Under current law, it is nearly impossible for people to do so. People who are unable to repay their student loans may be burdened by them for the rest of their lives.

Can you continue to use a credit card in bankruptcy?

On behalf of Christopher Todd Morrison, P.C. on Thursday, May 9, 2019.

Bankruptcy generally has different connotations whether the filing party is an individual or business. When individuals file for bankruptcy, it generally means they have fallen too far into debt and need help getting out.

Most people would probably not say they are okay in the midst of bankruptcy proceedings. Bankruptcy may be the only way to get personal finances in order, and it may be challenging to get through it on the other side all right. However, people filing bankruptcy will have some restrictions for the time being, and that includes not being able to use a credit card.

Texas consumers increasingly unable to pay credit card balances

On behalf of Christopher Todd Morrison, P.C. posted in bankruptcy on Wednesday, May 8, 2019.

Credit card charge-offs increased to 3.82% in the first quarter of 2019, which was the highest rate since 2012. Capital One had a charge-off rate of 5.04% during that time period. Furthermore, the seven largest credit card companies said that the number of accounts 30 days past due also increased. When an account is 30 days past due, a write-off will be more likely in the future.

The reason why these numbers are increasing may partially have to do with the information that credit card companies have. Individuals who were impacted by the financial crisis may have seen negative events fall off of their credit reports. Therefore, lenders may not be getting an accurate picture of a person's ability to repay their debts. To protect themselves, card issuers are tightening their lending standards. At Discover, fewer credit line increases are being made available to new and existing customers.

A bankruptcy may fade over time

On behalf of Christopher Todd Morrison, P.C. posted in bankruptcy on Wednesday, May 1, 2019.

Filing for bankruptcy will have an impact on a person's credit score. However, there are scenarios in which a person in Texas will see his or her score increase after doing so. This is because most debts that were previously on a credit report will have been discharged. In some cases, credit card companies and other lenders may seek out a consumer who has just filed for bankruptcy. However, there is no guarantee that credit will be available immediately after doing so. It is also likely that a lender will charge a higher interest rate.

A person who filed for bankruptcy may be able to rebuild his or her credit in as little as two years. This is in spite of the fact that a Chapter 13 bankruptcy stays on a credit report for seven years. A Chapter 7 bankruptcy will stay on a credit report for up to 10 years.

Trustee opposes bankruptcy protection for tv star

On behalf of Christopher Todd Morrison, P.C. posted in chapter 13 bankruptcy on Wednesday, April 24, 2019.

The television show "American Chopper" attracted many fans in Texas, but one of the reality show's stars has continued the real-life drama in bankruptcy court. Paul Teutul Sr., the famously cranky patriarch of the show, now faces opposition from the trustee of a bankruptcy court. Teutul filed for Chapter 13 bankruptcy protection in February 2018, but the trustee has filed a motion expressing doubts that Teutul can make the payments required by the bankruptcy plan.

The court filing on April 14 stated that he had not provided necessary federal income tax returns. The motion further detailed problems with his negative cash flow that led the trustee to conclude that he had no ability to fulfill his bankruptcy payment plan. The trustee determined that he had not met requirements to qualify for continued protection from creditors.