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Eugene Bankruptcy Law Blog

Do your debt issues have you feeling embarrassed?

For some Oregon residents, having money issues can be a source of embarrassment. They may think that they have somehow fallen short of those who have more money or those who have not landed on hard financial times. However, it is important to remember that financial hardships can affect anyone at any time.

Still, you may even feel some embarrassment about trying to find debt relief. After all, filing for bankruptcy is a major step. Of course, the decision to file is yours, and if you believe it could help relieve you of the overwhelming debt you have accumulated, you may want to shrug off the potential embarrassment and focus on the benefits that may wait on the other side of a successful bankruptcy case.

Bill could help student loan debtors

People in Oregon who are struggling with student debt might have the opportunity to discharge that debt in bankruptcy if a bill introduced in Congress is successful. The Student Borrower Bankruptcy Relief Act of 2019 has the support of one Independent, one Republican and 14 Democrats.

Student loan debt has become a serious problem. It is anticipated that by 2022, the total unpaid balance will be $2 billion. Over 25 percent of people with student loan debt are delinquent or in default. However, it has not always been so difficult to discharge student loans in bankruptcy. In the 1970s, a law was passed that required students to repay for five years before filing for bankruptcy. Two more years were added to the waiting period in 1990. In the late 1990s, the law was changed again. The new rule was that student loans could only be discharged in bankruptcy if repaying them caused "undue hardship".

Repairing a credit score after bankruptcy

Lots of Oregon residents are struggling with debts they are unable to repay. While personal bankruptcy may provide an option for debt relief, many are wary of taking the hit to their credit reports that come with the option. However, these debtors may still begin to suffer serious credit damage, especially if late payments or unpaid bills begin to rack up. This means that debt-resolving bankruptcy can actually improve some people's credit scores in the long run.

The impact of bankruptcy on a credit score varies and changes over time. While a Chapter 7 bankruptcy remains on a person's credit report for 10 years, a Chapter 13 bankruptcy, which involves structured repayments, remains on a credit report for seven years. People suffering from the worst credit issues, including large unpaid bills and extensive late payments, may even find that the impact of a bankruptcy raises their credit score instantly, even if it keeps them in a lower credit bracket. In any case, a debtor can work to rebuild their credit scores after bankruptcy and get back on the path to a solid credit rating.

How to manage your medical debt

Medical debt is a burden for many Oregonians. In fact, past due medical bills are a leading cause of bankruptcy.

The research on the cost of healthcare is startling. Nearly all patients surveyed reported being more concerned about the bill upfront than the procedure. Healthcare insurance premiums jumped again further making affording healthcare more expensive.

Consumer rights give debtors power to stop creditor harassment

Collection agencies sometimes cross the line into harassment when they contact debtors in Oregon. Abusive language, threats or excessive telephone calls and texts can add significantly to the stress of people who have fallen behind on payments. The Fair Debt Collection Practices Act recognizes that people might need protection from creditor harassment and establishes restrictions on the actions of debt collectors.

This law applies to collection agencies, debt buyers and lawyers but not to original creditors, such as a hospital that issued the bill. Third-party collectors for car loans, medical bills, home loans or credit cards must adhere to the law that forbids unfair and deceptive collection practices. They must restrict telephone calls to between 8 a.m. and 9 p.m. Debtors do not have to tolerate calls at their places of employment, and creditors cannot discuss people's debts with their friends or relatives except for spouses.

Bankruptcy options for the gig economy

If you work as a freelancer, you know the pride of being your own boss. You’re not alone. Freelancers Union reports over 38 percent of all workers, including over 50 percent of millennials, now work freelance jobs either on the side or as a main source of income.

The talk of the “gig economy” often misses the stress freelancing can bring, especially if expenses become harder to manage and collection calls and letters start rolling in.

1 in 7 U.S. patients hit with surprise medical bills

Patients in Oregon and across the U.S. are getting slapped with surprise medical bills despite staying within their health care network, according to an analysis by the Health Care Cost Institute. In fact, the report found that approximately 1 in 7 patients nationwide get an unexpected medical bill after seeking in-network medical care.

For the analysis, researchers examined almost 620,000 in-network inpatient admissions and subsequent claims in the District of Columbia and 37 states. They found that Minnesota had the lowest share of in-network hospital admissions that included one or more out-of-network claims, with 1.7 percent. Meanwhile, Florida had the highest share, with 26.3 percent. Oregon had a share of 4 percent. Of the various claim types, anesthesiology had the largest share of surprise out-of-network claims after in-network care, with 16.5 percent. Meanwhile, 22.1 percent of independent labs billed out of network.

Companies are helping employees pay off debt

Many Oregon residents look to their employers to help them with things like health insurance and saving money for retirement. Now, some employees may be able to look to their employer to help them deal with their debt.

Many larger companies are helping their employees pay off their student loans. Others are including debt solutions as part of the benefits package they offer when they hire new employees. There are a number of approaches that are being tried, including offering interest-free loans to pay off debt. Some offer payday loans or payday advances to help struggling employees address immediate financial concerns with the goal of protecting them from the trap of payday loan institutions.

Young Americans carry $1 trillion in debt

Young people in Oregon and across the country are facing an increasing debt burden. According to statistics from the New York Fed Consumer Credit Panel and Equifax, people between the ages of 18 and 29 owe $1.05 trillion in debt. While student loans comprise a substantial amount of this debt, other common burdens include credit card debt, auto loans, mortgages and other types of loans or consumer credit. This marks an increase in debt among this demographic, which last owed this much money in the last quarter of 2007. The trend at that time was later disrupted by the 2008 financial crisis.

Of course, young people are not alone. People between the ages of 30 and 39 owe $2.9 trillion in debt while people aged 40 to 49 owe $3.4 trillion in debt. People between 50 and 59 years of age owe $3.2 trillion, those 60 through 69 owe $2 trillion, and those 70 and up owe $1 trillion in debt. This means that the youngest and oldest Americans have approximately the same collective debt burden. Student loan debt, which has been widely recognized as a national crisis, amounts to $1.5 trillion of all personal debt, affecting 44 million people. Some expect that 40 percent of borrowers may default by 2023.

Getting back on your feet after bankruptcy

Bankruptcy is a long and sometimes disheartening process. The benefits you reap at the end, however, are worth far more than the effort you had to put in.

Changing your lifestyle after bankruptcy doesn't have to mean sacrificing the things you love, it's simply a matter of tweaking the life you already have. Your debt is behind you, and now your focus can be on creating the financial stability you have been wishing for.

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The Law Office of Kim Covington is a debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 19 years.

The Law Office of Kim Covington

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