What Happens When You Cannot Pay Medical Bills?

Question: We have approximately $40k in debt due to a medical condition that caused us to go broke, lose our income and have no ability to pay. Is there any type of hardship clause to help our situation? Or anything we can do to get back on track? – Amy B in Connecticut

Steve Rhode, the Get Out of Debt Guy, responds…

Having a financial hardship following a tragedy and unaffordable medical bills is more common than you would expect.

There is a “hardship clause” that will let you regroup and get a fresh start. In fact, it is the only debt relief option that will eliminate your debt in about nine-days and cost around $1,500 in fees. It’s a Chapter 7 bankruptcy.

If the problems are now behind you and you have income coming in soon, then it is time to deal with the past financial misfortune and get yourself ready for a better financial future.

So many people misunderstand bankruptcy. In horrible financial times, it is not something to fear or be afraid of. It is a legal right you have access to. It is the fastest way out of problem debt for the least cost.

I think you should read, So You Are Going to File Bankruptcy. That’s Good News. Congratulations.

Things can and will get better fast as soon as you close the door on the unfortunate financial past and focus on making tomorrow better.

Have a debt question? Can’t find what you need to know? We can! Submit any debt or finance question you have, and we’ll tap a pro who will respond as quickly as possible.

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How long does it take a medical bill to go to collections?

With debts like credit cards, the account only goes to collections after six to nine months of nonpayment. But that’s not the case with medical bills. Service providers often send unpaid bills to their collection department or a third-party collector quickly. In fact, even if you set up a payment plan, if you miss that payment by a few days the medical provider may send your account to collections.

Understanding the credit effects of medical collections

The good news is that the three credit bureaus – Experian, Equifax, and TransUnion – agreed to adjust their rules on medical collections.  In 2016, they rolled out the National Consumer Assistance Plan to help protect consumers against unfair credit reporting trends.[1] This included adjusting the rules on medical collections.

Under the new system, medical debt collectors can’t report to the credit bureaus until 180 days after an account becomes delinquent. The law is designed to help consumers avoid collections on medical bills that insurance is supposed to pay. However, it also gives someone who can’t pay six months to make arrangements before the account will appear on your credit report.

The second bit of good news is that even if a medical collections account does get reported, it won’t affect your credit score as badly in newer credit scoring models. Both FICO 9 and VantageScore 4.0 separate medical collections from other types of collections when calculating your credit score. Medical collections have less “weight,” meaning that they don’t negatively affect your score as badly as a credit card debt collection account would.

That’s not to say that you can just ignore medical bills and not worry about collections. However, it will have less of an impact on your credit while you decide how to deal with the debt. And even if you decide to declare bankruptcy to eliminate your medical debt, it may not affect your credit as badly as you may think.

See why Steve says your credit score may recover faster if you decide to file bankruptcy »

Debt Consolidation vs Bankruptcy: Which Should I Choose at 75 Years Old?

Question: I have $25,000 in credit card debt and only $2,000 a month in income. I’m 75 years old. Is bankruptcy a better choice than debt consolidation?

Bruce in California

Steve Rhode, the Get Out of Debt Guy, responds…

Just on face value, bankruptcy would certainly be at the top of my list to investigate further for you. You should meet with a local bankruptcy attorney who’s licensed in your state and discuss your particular situation.

If your assets are limited or not protected in bankruptcy, just given your age and income, it would make mathematical sense if you could eliminate your debt and live on your limited income. I’m less concerned about repaying your old debt – because I’m more concerned you’ll be able to afford to live and get by from this day forward.

Talk to a certified consumer credit counselor today for an expert opinion on your best option to get out of debt.

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Why consolidation may not work for you

If you’ve consolidated your past debt, you would be repaying it out of your limited income. Essentially, you would be trying to repair the past with future funds.

At 75, while I hope life treats you well, the odds are you are closer now to an unexpected medical or another expensive life issue that you’d have to deal with. By discharging the debt in bankruptcy and focusing on living within your income moving forward, just logically that seems like a more prudent approach.

If I were to engage in some pop psychology, I’d guess your reluctance to seriously consider bankruptcy has less to do with your financial numbers than your emotional reluctance.

Should you file for bankruptcy?

Bankruptcy has gotten a bad rap. It has an unearned reputation as the last refuge for deadbeats who cavalierly run up big bills on luxury items, then decide they just don’t want to pay for what they bought. So they fill out a bankruptcy application, walk away without paying a dime, and then run up big bills again.

Of course, bankruptcy doesn’t work that way. Not even close. It’s a powerful tool for serious people, and it’s not at all easy to make happen. It’s also nothing to be embarrassed about.

Look at it this way: If you accidentally slip on a banana peel and fall on your rear end in public, that might be embarrassing. But if you seriously hurt yourself doing so, and if you need surgery to get back to full health – well, that’s not embarrassing.

Bankruptcy is financial surgery for those who have slipped and fallen, often through no fault of their own. They may have suffered a divorce, death in the family, serious illness, natural disaster, or been a victim of crime. Bankruptcy is a way to hit the reset button.

If you want to know more, and if you want a step-by-step guide, check out Debt.com’s report, Should I File for Bankruptcy?

Can You Inherit Your Parents’ Medical Debt?

Question: My sister is in dialysis three times a week. Her insurance apparently doesn’t pay for all of it. She says she pays about $25 a month toward the bill. She says she’ll never get it paid off. Someone told her not to worry about it. When she passes, will her son be responsible for the debt?

— Nina in Virginia

Gerri Detweiler answers…

It must be incredibly stressful for your sister to continue incurring medical debt she can’t pay. Unfortunately, it’s not an uncommon situation. Medical debt is one of the leading causes of bankruptcy — and more than half of all collection accounts on credit reports are due to medical bills.

If your parents are drowning in medical debt and are considering a life preserver, let Debt.com connect you with the right credit counseling professionals to help them.

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Telling her to just ignore the bills may not be the best advice, however. A little over half of U.S. states have “filial responsibility” laws that can be used to hold children responsible for their parents’ necessary bills, including medical debt. These laws are not frequently enforced in the type of situation you described, but there have been some high profile cases recently where creditors have pursued adult children for their parent’s debt — especially by nursing homes and similar facilities.

Even if filial responsibility laws don’t come into play, another possibility is that when she passes away, the dialysis provider or a collection agency may try to collect from her estate, which is all of the assets that your sister may own. Therefore, if she has equity in a home or other assets, those may have to go toward paying your sister’s debts, rather than toward any inheritance she hoped to leave for her son.

If your sister is concerned her son will be saddled with debt he can’t afford after she dies, she may want to consult with a consumer bankruptcy attorney to learn more about her rights and responsibilities.

By the way, it’s important for her son to know that if there is no filial responsibility law in the state where his mother resides, his mother’s creditors and debt collectors are not entitled to look to him to pay what she owes after her death. In other words, even if they contact him to demand payment, he is not legally obligated to give them a penny so long as he did not incur any of the debt with his mother, or guarantee payment in writing.

Can I Retire With $60,000 On My Credit Cards? Or Am I Doomed?

Question: We are about $60,000 in credit card debt. I am 69 and need to retire. I will have retirement from my job and $35,000 in my 401(k), plus Supplemental Security Income. My husband is 57 and will keep working. How can I retire?

— Kathryn in Hawaii

Steve Rhode answers…

Retiring isn’t the problem here. This is: Making ends meet for up to the next 20 years.

Having some government benefit and $35,000 in a 401(k) isn’t going to make retirement comfortable for you — or even manageable. It will be tragically impossible to survive on these finances alone, unless your husband has some magic retirement account that will help to make ends meet when he is able to finally retire.

When you say you need to retire and you are on Supplemental Security Income, that indicates to me you have some evolving medical issue. SSI is what’s known as a “means-tested welfare program.” That’s the official way of saying the government will provide cash and Medicaid to low-income senior citizens and the disabled.

I’m assuming this means that continuing to work may just not be possible for you, given your potential medical limitations. Maybe that’s why you have to retire.

Given your possible medical situation, your limited upcoming income, and your debt, the most logical solution here would be to shed the debt quickly with a consumer Chapter 7 bankruptcy. This type of bankruptcy is the fastest way to eliminate debt legally, and in about 90 days your credit card debt will be discharged. That will lower your expenses that you can’t afford in retirement.

Your credit card debt is probably from expenses you paid for in trying to get by in the past. It’s all too common for those Americans struggling to pay their bills to “float” the gap between income and expenses on their credit cards. Sadly, that catches up to you rather quickly…

[If you don’t know if bankruptcy is right for you, read Should I File for Bankruptcy.]

If filing for bankruptcy is the right option for you, Debt.com can help you get the process started.

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…Retiring is the time to look forward and set yourself up for financial success. The ship has sailed to attempt to repair the past. Given what you’ve shared, you simply can’t afford to either pay the debt, now or in the future, and make ends meet on your new reduced income.

I would visit Benefits.gov and review if you are eligible for any additional supplemental income, medical, or food assistance for your household. You should absolutely meet with a local bankruptcy attorney who is licensed in your state and discuss your situation. And you should inform your husband he is going to have to be the primary breadwinner for the foreseeable future.

This won’t be a pleasant experience while you’re enduring it, but once you’re through it, life should improve. I’d also recommend consulting Debt.com’s Personal Finance section for advice on how to stay out of debt.

My fingers are crossed that your husband has a solid retirement account or pension that is going to help you survive when you are both unable to work.

Steve Rhode is known as the Get Out of Debt Guy and has appeared on FOX, CNN, ABC, NBC, and MSNBC giving money advice.

Why Did My Credit Score go Down Two Years After My Bankruptcy?

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Question: We had a chapter 13 bankruptcy that was discharged in March 2016. The only debt we have is our home mortgage, which has always been paid on time. But our FICO score has dropped with Experian by 8 points — and TransUnion by one. No one can explain why. Can you?

— Lawrence in Florida

Howard Dvorkin answers…

What seems like an easy question has a long answer, Lawrence. That’s because there are many reasons for what looks like a simple problem.

Why are credit scores so confusing?

Because they want it that way. I’m talking about the credit bureaus themselves – they want to confuse the public. Of all of the questions I’m asked one of the most common is also one of the most frustrating…

How do I know what my Credit Score is really? The reason it’s so complicated is simple, no one person or company is in charge of your credit score. You’ve probably heard of FICO score but FICO is actually a private company and its initials stand for Fair Isaac and Company. They’re actually a bunch of mathematicians that compile all of this information that reports out to other people if you’re a good risk candidate or not.

But a FICO score isn’t the only score you have. Three big credit bureaus – Experian, Equifax, and TransUnion compile all your credit and debt information, and they have their own complicated scores. They have these crazy names, like these: TransUnion Credit Vision scores, Vantage scores, Experian Plus score, the Fair Isaac Risk Model V2SM. Crazy, right?

Thankfully, those credit bureaus have rules. You can order your credit reports, which is what the scores are based on, and check them for mistakes. If you find mistakes, you can get them removed. You might be surprised by how many mistakes there are.  But the best part is you can order a report from each bureau once per year for free. Just go on Annual Credit Report.com and check it out.

If you still need help, call Debt.com. You can get a consultation with an expert for the same price – free. And don’t forget to sign up for our daily newsletters – they will really help you out.

First, let’s explain why your score differs by a few points between Experian and TransUnion. Each of those credit bureaus — and even a third called Equifax — are private businesses. Credit card companies and other lenders don’t always give the same information to each bureau, and each bureau has its own weird rules and technical procedures. That’s why there are specific scores with names like “TransUnion FICO Risk Score, Classic 04” and “Experian/Fair Isaac Risk Model V2SM.”

Second, a bankruptcy is obviously a big hit on a credit score, but there are a slew of minor ones that can also drag down a score — like closing old accounts. That decreases your “credit age,” which is something the bureaus look at. Why? Because the longer you have, say, a credit card that you pay off, the more responsible you appear with handling credit and debt. That matters to lenders thinking about giving you a loan. Same thing goes for applying for new credit too many times.

Third, you should pull your credit reports and see if there are mistakes on one or more. Given the sheer volume of data Equifax, Experian, and TransUnion process each day, even a small percentage of errors is a huge number. The Federal Trade Commission estimates “one in five consumers had an error” on their credit reports. Thankfully, you can dispute these and get mistakes removed. Read more at Learn about the Credit Repair Laws that Protect Your Rights.

Fourth, check those reports carefully for identity theft. Make sure no one is opening new credit in your name. This is the fastest-growing crime in the nation, and the numbers are staggering.

Here’s what I recommend, Lawrence: Read the Debt.com report How to Fix Your Credit for Free or for a Reasonable Price. To answer your original question will require eliminating some explanations. You might want to seek a credit repair consultation if you can’t deduce the situation on your own.

Find all the tools and services you need to achieve good credit in Debt.com’s Credit Solutions Center.

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I’m sorry the answer isn’t as straightforward as the question. The good news is, experts are available to help you.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a  CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

What Can I Do To Avoid Bankruptcy?

Question: I called a credit counseling agency and went through the free process, but they said I should consider bankruptcy and I hung up. 

I owe $22,000 on seven credit cards because I was laid off but still had to take care of my declining parents who have very little to live on. I work part-time but can only cover my living expenses. That means I have nothing left to pay the credit cards.

I have a mortgage and a car loan that’s killing me because I’m upside down on it and can’t get out from under. Is there anything besides bankruptcy available? I don’t want to admit that I’m a failure.

— Pauline in Florida

Steve Rhode answers…

I hear this all the time, and it pains me. Declaring bankruptcy does not make you a failure. Let me repeat that in capital letters: BANKRUPTCY DOESN’T EQUAL FAILURE.

How do I know? I declared bankruptcy myself. Let me repeat this out loud…

Bankruptcy is a scary word. It’s a word that a lot of people fear. They think that they’re going to be losers; terrible people if they file bankruptcy. Yet so much of what you hear about bankruptcy is just not true. People who file bankruptcy save more for retirement, their credit scores improve faster, they’re able to buy cars and homes faster.

There is a time to use bankruptcy. It is a legal option to you. And only by evaluating all of your choices: bankruptcy, debt settlement, credit counseling, loans. Only then can you make a decision that is best for you. Don’t be afraid of bankruptcy. In fact, I went bankrupt. It wasn’t wonderful, it wasn’t special. For me, it was depressing, I felt all alone, and I didn’t know who to turn to. But there are great people here that you can turn to for help, who care about you and can help you. And maybe bankruptcy is right for you.

If you’re curious, you can read all about my bankruptcy. I’m very public about it. Even proud.

How can I be proud about something like that? Because I triumphed over adversity, and I learned from my mistakes. In fact, I learned so much, I counsel others about debt. I not only recovered financially, I excelled. I now have enough money to spend it rescuing animals in my airplane.

I hope I’ve punctured the myth and stomped the stigma about bankruptcy for you, Pauline. Now let’s break this down…

Credit counseling

Kudos, Pauline, for consulting a credit counseling agency. If it was a reputable one, you received a free debt analysis. (How do you know it’s reputable? The nonprofit has been around for decades, has an A-plus rating with the Better Business Bureau, and has many excellent reviews online. Learn more in Debt.com’s Credit Counseling section.)

Need help deciding which solution is the best choice for your unique financial situation? Talk to a certified consumer credit counselor now.

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Bankruptcy isn’t DIY

If you were instructed to investigate bankruptcy, you can educate yourself online. I’m biased, since I consult with Debt.com, but I’d start with its report, The Pros and Cons of Bankruptcy.

Bankruptcy demands you consult an expert, and Debt.com can introduce you to someone. Once you get past the stigma of bankruptcy, this is the hardest part. Fear of a complex process is enough to make some folks shut down and bail out. Stick with it, though.

The aftershocks of bankruptcy

Yes, you’ll suffer some after bankruptcy. Your credit is going to take a huge hit. We’re talking 7-10 years. There are things you can do, though. Reassure yourself by reading 5 Tips For Post-Bankruptcy Credit Repair.

I can’t give you more specific advice about your situation, Paulina, because I don’t have nearly the details your expert will compile. But I can tell you: Bankruptcy is just a tool, a thing, a process. It’s legal and it works. Sure, it’s serious and not at all fun. Once you get through it, better times await you. Trust me, I know.

Steve Rhode is known as the Get Out of Debt Guy and has appeared on FOX, CNN, ABC, NBC, and MSNBC giving money advice.

Can I File for Bankruptcy Twice?

Question: I’ve been working with a debt settlement company since May 2016. They have settled six of my accounts with three more to go.

I chose not to do bankruptcy, because it was still showing on my credit report, although it was discharged in 2005. And I didn’t know if I can file again.

How I got to this point was through unfortunately circumstances and bad habits. I became addictive to payday loans, other high-interest loans, and got a car title loan just to pay other loans. Now I’m stuck with a foolish car title loan until October 2019.

The debt settlement have given me much relief. I was drowning in debt. I still have quite a bit to go, but I find myself being in the red each month. I have budget for each pay period, but I still find myself using my overdraft funds ($500 limit/$28 for each paid item).

I have cut back all my personal needs and just pay my bills. I do get an extra $200 a month for keeping my grandchild on weeknight and weekends. Sometimes, I’m over by a $100 and sometimes by $300. It depends on what has happen unexpectedly in that pay period. Those additional fee of $28 each can add up.

What can I do more to help with my financial difficulties?

— Jo in California

Howard Dvorkin answers…

Your story is complicated but not unusual, Jo. For two decades, I’ve seen Americans sink slowly into debt as if it were quicksand. They grab at anything they think will save them.  That does slow down the inevitable — but it doesn’t stop it.

Let’s break this down into smaller chunks…


If your bankruptcy was discharged in 2005, you can get it removed from your credit reports. Chapter 13 bankruptcy can stay on those reports for seven years, while Chapter 7 can linger for 10.

Here’s the catch: Bankruptcies don’t automatically drop off your credit reports. You have to request it. Here’s the step-by-step guide for doing that. I urge you do so, Jo.

Debt settlement

Debt settlement also drags down your credit score. Rebuilding that score involves more steps than doing the same for bankruptcy, simply because there are more variables — each individual debt can have its own circumstances.

That’s why you should read this Debt.com report, which will give you a checklist for removing those negative marks.


If there’s any good news in your tragic story, Jo, it’s that you’ve started budgeting. I urge everyone to do that, and Debt.com even offers a starting place: Build a Customized Budgeting Plan.

Of course, your budget shows you simply can’t make ends meet. So what now?

Getting professional help for free

Jo, your stressful situation is tailor-made for credit counseling. This is a free service from a nonprofit agency that puts you on the phone with a certified credit counselor. That counselor can do more for you than I can in this answer. How do you find a qualified expert? Click here: Free Credit Counseling Services.

If I were to guess, Jo, bankruptcy might once again be your best option. That might sound depressing, but credit counseling can also give you the tools to make sure this time, you emerge better off than before — and never again feel like you’re being dragged down in debt.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Can I Get a Credit Card After Filing Bankruptcy?

Question: I’m in the process of declaring bankruptcy. I actually consulted Debt.com and got hooked up with a company that’s helping me.

I’m relieved, because I was so far in debt after a motorcycle accident. Actually, I was in trouble even before. I already owed $9,000 on my credit cards and was a year from paying off the bike when I ran up big medical bills and couldn’t work.

If I’ve learned anything from this awful experience, it’s to be smarter about my money. I’ve already been told my credit score is going to take a big hit, so how do I rebuild my credit? More importantly, how do I get a credit card back so I can not only rebuild my credit but also just live?

— Ivan in California

Howard Dvorkin answers…

There’s a lot to talk about here. Let’s start with this: Congratulations.

That sounds like an odd thing to say to someone declaring bankruptcy, but bankruptcy exists for a reason. It can truly help people. Of course, like any other powerful tool, it can also be used irresponsibly. I urge anyone else considering this option to read The Pros and Cons of Bankruptcy.

Based on what you’ve written, Ivan, you’re doing bankruptcy the right way, and you have the proper attitude. I’m glad you’re looking ahead, too. Chapter 7 stays on your credit report for 10 years, while Chapter 13 is slightly less at 7 years. That’s a long time.

As for credit cards, I’ve often preached you should strive to live without them, at least for a while. In my book Power Up, I wrote…

They’re not money. They don’t look like money or feel like money, and when you purchase an item with a credit card, you don’t get that nauseating feeling of spending a large amount of cash. 

That being said, I realize credit card usage is so widespread and ingrained in our culture, people look at me like I’m crazy when I suggest going cold turkey. It’s as if I told them to ditch their cell phones for landlines.

Getting a credit card after bankruptcy isn’t as difficult as you might think. Then again, what you’re getting isn’t really a credit card. You have two options: “secured card” and a “sub-prime card.” Both operate on the same principle: You put up the money you charge.

In other words, if you want a $2,000 credit limit, you deposit $2,000 with the issuer of the card. If that sounds weird, think about it this way: You’re borrowing from yourself, but by making timely payments, you actually build back your credit.

You can read more here: 6 Best Credit Cards That Help You Build Credit.

Finally, Ivan, know this: Surviving bankruptcy isn’t something to be embarrassed about, and neither are secured credit cards — especially if they’re the wake-up call that sets you on the path to financial freedom. It sounds like you’ve taken your first steps.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

How Can I Stop Sweating About My HVAC Loan?

Question: I filed Chapter 7 in December and it was discharged in March. I was originally told that the unsecured HVAC loan I had through a credit union could not be included in the bankruptcy — but on my credit report, that loan shows up as closed and included in bankruptcy.

I contacted the credit union, and they said since I have been paying the loan, I have what is called a “retain,” where I pay the loan without it being reported to my credit in order to stay a member in good standing with the union.

The representative of the credit union said if I stopped paying, the loan would just be charged off as part of the bankruptcy. My question is, can the credit union come “repossess” the HVAC unit if I stop paying the loan?

— Tina in Oklahoma

Howard Dvorkin CPA answers…

While I was pondering your question, Tina, a Debt.com intern asked me, “What’s an HVAC loan? Is that a new kind of mortgage?” When I explained it’s simply a way to finance a central AC unit for your house, she was stunned.

If you don’t own a home and have never dealt with what’s known as an HVAC system — which stands for “heating, ventilation, and air conditioning” —  you’ll be shocked to find out a replacement can cost more than $10,000 depending on the size of your house and where you live.

Because of the steep price tag, taking out a loan to install or replace such a system is quite common. They’re sometimes offered through the contractors themselves, but many people will go to their credit union, where interest rates will be much lower. That’s apparently what you did.

I consulted a good friend on your case. Steve Rhode is better known as the Get Out of Debt Guy, and here’s what he had to say…

Now that’s an interesting situation. The short answer is nobody wants your used HVAC unit. Ultimately, the exact answer is going to lie in your financing agreement. It will detail the credit union’s rights in case of default or bankruptcy. It’s also a great question for your bankruptcy attorney. I would suspect your bankruptcy attorney, like me, has never heard of such a repossession.

That’s obviously not the clear-cut answer you wanted to hear, Tina, but I must agree with Steve. I just don’t see the credit union dispatching a truck to rip out your HVAC unit so it can resell it and recoup some of its losses. However, neither Steve nor I can give you a definitive answer, because that’s wrapped up in the paperwork you signed.

I’d strongly urge you to take Steve’s advice and contact your bankruptcy attorney. It might not take that long to get an answer, and I hope the news is good.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Will Bankruptcy Keep Me From Buying A Car?

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Question: In 2009, I filed for bankruptcy. Currently, I have several open credit cards that I pay on time. If I consolidate my credit card debt, would it affect me in the process of purchasing a car?

— Lorena in France

Howard Dvorkin CPA answers…

In the three short sentences you wrote, Lorena, there’s a lot to deconstruct. So let’s dive right in…

There are several kinds of bankruptcy, and each has different rules and consequences. For instance, Chapter 7 bankruptcy, often called “straight bankruptcy,” eliminates unsecured debt when you give up you assets. That kind of bankruptcy stays on your credit report for 10 years.

Meanwhile, a Chapter 13 bankruptcy (which involves a repayment plan) stays on your credit report for only seven years.

Why is this important? Well, if you’re trying to buy a car, and your Chapter 7 bankruptcy was in 2009, it’s still on your credit report — and lenders will see it. However, if you filed for Chapter 13, it’s now eight years later, and has disappeared from view.

This is crucial because lenders “pull” your credit report before giving you money. If you’re buying a car and seeking an auto loan, a bankruptcy will make the terms of that loan more expensive for you.

OK, so that’s how bankruptcy can affect your impending car purchase. The second half of your question is about credit card consolidation. Here again, there are several possibilities. In other words, when you talk about “consolidating my credit card debt,” that topic has several possible tactics within it.

For example, you can get what’s called a “personal debt consolidation loan.” You do this through a bank or credit union or an online lender. Yes, you’re taking out a loan, but the interest rates will be significantly lower than what you’re paying on your credit cards. You use this new loan to pay off the credit cards, then you pay back the consolidation loan.

Of course, the only way to get a low interest rate is to have a high credit score. If you declared bankruptcy in 2009 and it’s still on your credit report, this option isn’t likely to work.

A better option in your case, Lorena, might be a debt management program. Known by the initials DMP, these programs are available through nonprofit credit counseling agencies.

The advantage to a DMP is that it’s set up in conjunction with a credit counselor who reviews all your debt-relief options. If a DMP is right for you, your total monthly payments can be reduced by 30 to 50 percent.

While it can take 36 to 60 payments to pay off the debt, you can actually build good credit during the process — which makes buying a car a little cheaper.

While you didn’t ask, let me suggest another course of action for you, Lorena: Buy a cheap used car you can afford with cash on hand. Sure, it won’t be a vehicle that impresses your friends. It will, quite frankly, be old and ugly. However, it’s only temporary, and if it last long enough for you to get clear of your bankruptcy and a good distance into a DMP, you’ll be able to reward yourself with a nicer vehicle in just a little while.

Consider it, Lorena.

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