If I Have Overdue Medical Bills, Can I File for Bankruptcy?

 Posted on July 27, 2020 in medical debt

The U.S. has some of the highest medical costs in the world, leaving many patients who visit the emergency room or go to the hospital financially destitute. Even those who have health insurance may find that their coverage is not enough to fully cover their necessary medical treatments. No one can predict the manifestation of serious illnesses or accidental injuries, but you rarely have a valid choice, leaving you to choose between unwanted debt or suffer the possibly fatal consequences. If you find yourself overwhelmed with medical debt, you do have legal options to help you payback the costs overtime or relieve yourself of the costs altogether. Filing for bankruptcy may be your last resort, but it may also be your only chance of moving forward.

“Medical Bankruptcy”

Those whose debt is solely made up of pastdue medical bills may believe that they can file for “medical bankruptcy” and avoid their other assets getting involved in the process. There is no type of bankruptcy known as medical bankruptcy; however, medical bills are a common reason that people file for bankruptcy. Medical debt falls under the same category, known as unsecured debt, as credit card debt, personal loans, old utility bills, and borrowed money from family or friends. Since bankruptcy cases must be equally fair for both the debtor and creditor, you must list all of your debts, personal property, and real estate within your bankruptcy case. There are two ways that most people file for bankruptcy: Chapter 7 and Chapter 13 bankruptcy, both of which have a large impact on your credit score.

Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy is often the more desired option since it discharges or forgives all of your debts, not requiring you to pay them back. Any medical debt that you have accumulated can be included in a Chapter 7 bankruptcy claim. The process typically only takes four to six months to complete and grants immediate relief to those filing for this type of bankruptcy. There are a few types of debt that cannot be discharged, such as income taxes and past-due child support or alimony payments. While Chapter 7 is often the most desirable option, since you will not need to pay the debt back, there are strict eligibility requirements. If your household income is lower than the state median income, you are eligible to file Chapter 7 bankruptcy.

Chapter 13 Bankruptcy

This type of bankruptcy extends your timeline for paying back your debts, creating a three to five year payment plan for debtors. Chapter 13 bankruptcy is the common option for those who have a steady income, allowing them to pay off their debts while still having disposable income. The amount owed is dependent upon your debt amount and your income. Depending on your situation, your amount owed could be reduced and you may have your remaining debt discharged at the end of your payment plan. Any missed payments can lead to the seizing of your assets.

Contact a New Braunfels Bankruptcy Attorney

As you can see, there are a number of factors that can contribute to your ability to file for bankruptcy and which type of bankruptcy is best for your situation. It is always advised to speak with a well-seasoned attorney who understands your state’s policies regarding filing for bankruptcy. The Law Offices of Chance M. McGhee has over 20 years of experience assisting Texans overcome their debt difficulties, including those that consist of significant medical costs. Contact our Boerne bankruptcy lawyer at 210-342-3400 to discuss the details of your case during your free consultation.

Sources:

https://www.thebalance.com/what-to-know-about-filing-medical-bankruptcy-4159606

https://www.creditkarma.com/advice/i/medical-debt-in-bankruptcies

https://upsolve.org/learn/get-rid-of-medical-bills-in-bankruptcy/