Disability, even temporary, is an unwanted life event that can wreck your finances. Disability income never replaces total income. Bankruptcy might help if you’re off-track because of an accident or illness. You should know these things about disability.
#1 Disability Payments Are Exempt in Bankruptcy
Bankruptcy allows you to keep disability payments. This is true whether they are from Social Security, the VA, or private plans.
#2 Medical Bills Can Be Completely Discharged
Medical bills are unsecured debt. There are no assets being held as collateral. Therefore, you can completely wipe out these bills as “unsecured” debts.
#3 Credit Card Bills Can Be Completely Discharged
Credit card debt is also unsecured debt even though you purchased items with the credit cards. They fall under unsecured debts, just as medical bills do.
#4 Student Loans May Be Eligible to be cancelled, even outside of Bankruptcy Law.
Bankruptcy does not discharge student loans as a general rule. However, the government or “servicer” of the loan may cancel the loan if you are totally and permanently disabled.
#5 Some Income Taxes May Be Discharged
Most people think the IRS is the big, bad wolf. However, bankruptcy can actually discharge income taxes in some cases. The very “general” rules are that you filed your tax returns on time and the taxes are more than 3 years old.
Be sure to visit my website for more articles and information, or to contact me for yourself or someone you might want to refer to me.
Peter Blinn
I’ve helped people for more than 30 years. I do it by listening – and putting clients at ease – while meeting their individual needs and helping with their goals. I represent clients in many counties, including Marion, Lake, Citrus, Sumter, and in The Villages.
