Medical debt in bankruptcy is considered an unsecured debt which means they aren’t secured with a collateral such as a house. They don’t get a priority status like student loans, child support, or tax debt.
Medical debt is a high percentage of debts that get discharged in bankruptcy. When medical bills start coming in after a hospital visit or surgery, it is easy to get overwhelmed by them and hold off on paying them. But just like any other debt, they can get sent to collections and have a very negative impact on your credit. They can also lead to lawsuits and judgements.
Filing Chapter 7 with Medical Debt
The good news is, in most cases, medical debt is easily dischargeable. It is always best to get a case evaluation to determine the best steps to take with your specific case. There isn’t a certain amount that can be discharged and there is no payback in a chapter 7 bankruptcy. You will need to pass the means test.
Filing Chapter 13 with Medical Debt
Chapter 13 is a little different than chapter 7 in that it requires a repayment plan for a portion of your debt to be determined in a chapter 13 plan. Chapter 13 bankruptcy has debt limits. Every few years these limits change and the current debt limit is $419,275 for all unsecured debts (not just medical debt). As long as your debt is less than this, you can file for Chapter 13 and most of your medical debt will be discharged. You will only need to pay back a fraction of it in a chapter 13 plan.
What to do about your medical debt
It is always best to get a case evaluation. Ask an attorney to determine which type of bankruptcy is best for your particular situation. They can also help you in knowing if your property is protected under exemptions.
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