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Filing for Bankruptcy Due to Medical Debt

July 12th, 2019 at 6:34 pm

medical-debtMost of the time, a person files for bankruptcy because it is the last option for bills that cannot be paid. After all, a bankruptcy on your record can diminish your credit score and make it difficult to borrow money for items like a house or a car for years. When a person files for bankruptcy, it is because they have exhausted all other options. Unfortunately for many Americans, the thing driving them to file for bankruptcy is medical debt. According to CNBC, 66.5 of all bankruptcies filed in the United States between 2013 and 2016 were tied to medical issues such as high costs for medical care or taking time off of work for medical reasons. If you have found yourself in the precarious situation of too much medical debt, here are a few things you should know before you file for bankruptcy:

Your Medical Debt is Dischargeable in Bankruptcies

Here is the good news — medical debt is dischargeable in both Chapter 7 and Chapter 13 bankruptcies. The type of bankruptcy you file for will entirely depend on your financial situation and which option would make more sense. A Chapter 7 bankruptcy would completely eliminate your medical debt, while a Chapter 13 bankruptcy would reorganize your debt into manageable payments.

There is No Such Thing as a Medical Bankruptcy

Technically, there is no such thing as a “medical bankruptcy”; there is no bankruptcy that can only discharge your medical debts. If you have medical debt and you file for bankruptcy, it is treated as an unsecured debt, which is in the same realm as credit card debt, personal loans and utility bills. Filing for a Chapter 7 bankruptcy would wipe out ALL of your unsecured debts — not just your medical debt.

There May Be Other Ways to Repay Your Debt

Before you make the decision to file for bankruptcy because of medical debt, you should make sure that you have absolutely no other options. Once you realize you are becoming overwhelmed with medical bills, you should immediately contact your hospital or health care provider to see if they offer any type of repayment plans. At the very least, you should inform them that you cannot pay the entire amount, but will pay what you can. If medical bills are preventing you from paying your rent or mortgage, utilities or other important bills, you may want to consider filing for bankruptcy.

Hiring a Boerne, TX Bankruptcy Lawyer Can Make Your Life Easier

If you are overwhelmed with medical debt, filing for bankruptcy may be your best option. At the Law Offices of Chance M. McGhee, we can look at your financial situation and help you determine whether or not filing for bankruptcy to help with your medical debt is in your best interest. Our skilled New Braunfels, TX bankruptcy attorneys have years of experience under their belts and are prepared to guide you throughout the bankruptcy process. Call our office today at 210-342-3400 to schedule a free consultation.

 

Sources:

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

https://www.thebalance.com/practical-steps-to-file-medical-bankruptcy-4158129

https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most-americans-file-for-bankruptcy.html

 

 

How Will a Bankruptcy Affect My Credit Score?

February 22nd, 2019 at 3:47 pm

TX bankrtupcy lawyerOne of the biggest worries people have when they go to file for bankruptcy is what that will mean for their credit score. There is a lot of confusion surrounding bankruptcies and how they affect your credit. While it is true that they do negatively impact your credit score, it is not nearly as bad as some have let people believe. There is no one answer to how your bankruptcy will affect your credit score. It is a combination of what your credit score was before your bankruptcy and what appears on your credit report. Each situation is different and it is nearly impossible to say how a bankruptcy will affect your credit score.

Effects on Your Credit Score

While there is no simple way to tell how a bankruptcy will affect your credit score, FICO, one of the nation’s leading credit reporting bureaus, has released information on how bankruptcy and other credit mistakes could affect your score. According to FICO, those with higher credit scores before bankruptcy typically lose more points after a bankruptcy, while those with lower credit scores lose fewer points. Despite the difference in the number of points that the score drops, both people with high and low credit scores will have credit scores that end up in the same vicinity.

How Long Bankruptcies Stay on Your Credit Report

Much of the impact bankruptcy has on your credit score is determined by how long it will be on your credit report. The length of time in which the bankruptcy will be on your credit report varies depending on the type of bankruptcy you file. For example, a Chapter 13 bankruptcy will appear on your credit report for up to seven years and your discharged debts will also stay on your report for up to seven years after they are discharged. In a Chapter 7 bankruptcy, the bankruptcy will appear on your report for up to 10 years, though the discharged debts will drop off the report after about seven years.

Worried About Your Credit Score? Contact a New Braunfels, TX Bankruptcy Attorney

For most people bankruptcy is (and should be) a last resort. If you have tried other debt and credit counseling options and nothing has changed, then you may need to talk to a skilled Boerne bankruptcy lawyer. At the Law Offices of Chance M. McGhee, we have extensive knowledge of U.S. bankruptcy law and we also have more than 20 years of experience with helping clients get a clean slate. We can walk you through the bankruptcy process from start to finish and we can help you set yourself up for success after your bankruptcy is completed. Contact our office today by calling 210-342-3400 to schedule a free consultation.

 

Sources:

https://www.moneycrashers.com/bankruptcy-affect-credit-score/

https://www.thebalance.com/how-much-will-bankruptcy-hurt-your-credit-score-960061

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