The Affordable Health Care Act as it Pertains to Bankruptcy

| Interviews
Katherine: Hello everyone. Thank you so much for joining us today on This Needs to Be Said. Today we’re going to be joined by our friend attorney Alexz and he’s going to talk a little bit about what’s hot in the news right now, the Affordable Health Care Act as it pertains to bankruptcy. Welcome back Attorney Alexz. How are you?
Attorney Alexz: Hi, I’m great. How are you?
Katherine: I’m doing wonderful. This is like something that’s hot off the press, so let’s get right into it your thoughts about the direction of it being passed up to the senate for consideration at this point. What are you thinking? What’s the possibilities here?
Attorney Alexz: Well, I’ve got some concerns because I think it’s more of a political grandstanding than anything else. Where I’m at, I’m a consumer bankruptcy attorney, and what I’ve seen in the last four or five years since the passage of Obamacare is a direct correlation between the reduction in bankruptcies because people have medical insurance and the Affordable Care Act. More people were covered. There was a definite down tick in bankruptcies. I used to see every other case or every third case was a medical bankruptcy. I don’t see that volume of those type of cases anymore. It’s just … That’s a change directly after the Affordable Care Act, so I’m concerned that it may be repealed and there’s really nothing to recover people or re-help people, so I’ve got concerns.
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Katherine: And that is concerning if that number’s been down and the possibility can go up. We won’t get too political with it. We’re going to get back to some more bankruptcy questions, but I wonder how we can encourage people to stay focused on what’s really being said because if people just didn’t like Obama and they don’t like it being called Obamacare, then we can call it Affordable Health Care because that’s what it is. It’s being improved upon in my opinion. I hope that’s the possibility of what’s going on that it’s being improved upon and not going away because if it goes away then we’re going to have more people visiting people like you.
Attorney Alexz: It’s an interesting position because I don’t want more clients with medical bankruptcies. Realistically I don’t want any clients with bankruptcies, but I’m in that area that I serve that need. It’s going to be heart breaking if I look back in a year or two from now and just see a whole rise in medical bankruptcies based on the potential repeal of Obamacare. It’s a concern. I’m not looking to get rich off of people with medical bankruptcies. That’s not why I’m here.
Katherine: And especially since you’re seen a decrease in it, so you know that it can get better, no?
Attorney Alexz: Absolutely, yeah I think that’s correct. Yeah.
Katherine: What I want to talk a little bit about some other things that … because we don’t want to just stay stuck with the medical bankruptcy. We are hoping that this does not become a problem, or it doesn’t increase where people are coming to you for that, but for the rest of the things that people could come to bankruptcy for, let’s talk about how quickly they can turn things around in their lives if the use bankruptcy as a tool or vehicle for that whether they are facing a foreclosure or maybe they are talking to their mortgage company because they’ve fallen behind or a car’s been repossessed. Talk to us about those people.
Attorney Alexz: Sure. There’s a couple of different chapters in bankruptcy. You can file chapter seven or chapter 13. Chapter seven is the liquidation bankruptcy, but most of the clients that I deal with actually don’t lose any assets or things that they own. They end you shedding all their unsecured debt which is typically medical debt, credit card debt, apartments, utilities, collections, things like that. That’s actually a very fast process. Oftentimes people take two, three, four, five years before they pick up the phone and talk to somebody like me, and they come in and meet with me. Within four or five months after they meet with me, they’re actually out of debt and it’s sort of a blip on their rear view mirror versus this immediate enormous thing they’re facing looking forward. Chapter seven is very fast and efficient at that, but it doesn’t do everything.

There’s another chapter called chapter 13 that has more flexibility, and it can accomplish more things. In addition to getting rid of the unsecured debt, the collections, the medical bills, and things like that, chapter 13 ends up with a payment plan. Usually for 36 to 60 months, or three to five years, you make some kind of a payment to the bankruptcy court trustee through usually a centralized office, and you can use those payments to pay things like mortgage arrears, car loans, secured debts, to eliminate tax liens in some cases, to reinstate driver’s licenses that are suspended for a moving violations and parking tickets. You don’t have to pay all your debt when you’re in this repayment plan. That’s a real misnomer that you have this long term payment plan where you have to pay all your debt.

Now, there’s portions of the debt you have to pay, and then the rest of it, just like a chapter seven, gets eliminated. So that is a powerful way to stop foreclosures, reinstate mortgages, pay taxes, purchase cars, and in fact in chapter 13, some of the fun things that we get to do is actually get back repossessed cars from creditors and give our clients an opportunity to pay back the actual loan, and usually it’s at a much lower interest rate than they were paying before. If I have a client that comes in with a 15 or 20 thousand dollar car loan at 30% which is unfortunately not uncommon, I can reorganize that loan usually for the same or even oftentimes a lower balance at four, five, or six percent in many cases. That’s a huge savings for the client paying a car off for six percent rather than 30%. This is some of the exciting things I get to share with my clients when I meet them in this forum.

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Katherine: I think that’s encouraging for people. So you say the process is fairly quick. Now, so people will understand. Now I’m going through bankruptcy. I’m working with you to turn things around. What about the phone calls and the letters and the contact from the people that I owe? Is that something that they can come back later to say okay well you did this bankruptcy and you negotiated for a lower term, but you still owe us this money? Somebody has to pay us this money. I ask that question Attorney Alexz, because I’ve had a repossession. They say we sold the car, and we didn’t get what it was worth, so you owe us the rest of the money. So is it similar to that?
Attorney Alexz: Now it’s similar in terms of that’s how it stars. So you have a car that’s repossessed. They’re supposed to sell it at public auction, and then they’re going to send you a note saying well we sold. You owed us 10 thousand bucks on the car. We got three at auction. You owe us $7,000. It’s called a deficiency balance, and in terms of the way it works legally, it works just like a credit card debt. It’s unsecured. It’s not tied to an asset, but you legally owe the money.

If you file a bankruptcy on that debt, and you get through bankruptcy which again is 90 days or so in chapter seven or three to five years in chapter 13, you get a court order called a discharge. A discharge is a permanent court order that says that debt is gone forever never to be heard from again. It’s a court order just like court orders in criminal cases. When you have a court order that says you don’t owe the debt, and somebody thinks that they can collect that debt, they’re in contempt of the court order. In situations like that, which happens a lot, you have rights against the credit, the people alleging that you still owe the debt. The rights are so strong in fact that often the cases that we deal with this, they have to pay my clients money for the harassment, and they have to pay all of our attorney’s fees to collect the money.

Just in the way the creditors can collect sort of from you before you file bankruptcy, I call it the old switcheroo. You file bankruptcy, all of a sudden you’re in control, and if they’re trying to collect from you, you get to go after them for money and damages. We’ve been very successful with that sort of second part of bankruptcy, the rights enforcement part of bankruptcy over the years, and it’s a big part of what we do.

Katherine: So a person is protected in this situation. They want to reset their lives. They’ve felt guilty about it. They’re you know you don’t want to answer your phone because people are calling. You don’t know who it is. It’s probably a bill collector because in your mind I owe everybody. But once they work with you, you’re saying that this is it’s kind of like it goes into this bubble. Whoever you owe goes into this bubble, and you’re protected from having to I guess look over your shoulder, so you get this opportunity to reset. Is that what it’s like?
Attorney Alexz: It’s very much like that. The way I explain it is when people come into my office they’re often, they don’t see a difference between themselves and their debts, and they think they’re the same thing, but when we file the bankruptcy, we actually separate the human being from the debts. We sort of lock the debts in this bubble or I call it behind a fence. People go on with their lives, and the debts have to stay behind the fence. If they ever try to jump over that fence, and collect and even call. Collection activities can be very small, collection letters, a phone call, things like that or violate the rules, you’re completely protected under the bankruptcy when you choose to enforce your rights which is through typically what’s called a contempt action or an adversary proceeding in the bankruptcy’s court setting to enforce the rights. Absolutely.
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Katherine: Wow, well this is just the beginning. We’ve started talking to you in the last interview, but this is just the beginning or our conversations with Attorney Alex. If you have any questions, you can get in touch with him outside of This Needs to Be Said because no one size fits all. We’re giving very broad strokes here. Your situation is different from another person’s situation, so in order to find out more specifically how he can help you or if bankruptcy is right for you, he’s going to give his information so that you can reach out to him directly. At this time, Attorney Alexz, could you share with people how to get in touch with you outside of This Needs to Be Said?
Attorney Alexz: Sure, if you want more information, you can look at my website which is geared towards Oregon consumers which is,, or you can call my office directly at 503-278-5400, and we’ll be happy to see if there’s anything we can do to help.
Katherine: Awesome. Until next time, have a wonderful day.
Attorney Alexz: Thank you so much.
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