There are lots of different types of debt including credit cards, personal loans, student loans, tax, and medical. Medical debt refers to debt incurred by individuals due to health care costs and related expenses. Medical debts in bankruptcy are considered unsecured creditors which means they aren’t secured with collateral such as a house. They are not considered priority debts 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 type of debt, they can get sent to collections and have a very negative impact on your credit report, debt collectors can come after you, and they can also lead to lawsuits and judgments.
Filing Chapter 7 with Medical Debt
The good news is, in most cases, medical debt is easily dischargeable right along with your bankruptcy discharge. 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. This involves comparing your income to the state’s median income. You can read more about the means test here. There are debts that can not be discharged in bankruptcy. Things to consider are you will need to keep up paying your health insurance and for those debts that may not dischargeable, the trustee may do a wage garnishment in order to pay some of those debts.
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. For instance, you may get to discharge 70% and then you form a payment plan to repay the remaining 30%.
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
You might feel like the medical debt is insurmountable, especially if you are just getting started. Consulting an attorney can help you in so many ways. We offer a program to help you recover your credit score after filing for personal bankruptcy. We can also help you determine the best way to go about getting out from underneath a mounting amount of medical debt. There is a solution. It is always best to get a bankruptcy case evaluation. During this free consultation with an attorney, they can help you 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 and they can help you navigate with the bankruptcy trustee for your nonexempt assets.
Bankruptcy is never an easy decision, but the options available can offer relief and get rid of stress. The bankruptcy process can be complicated. Bankruptcy laws are in place to protect everyone involved including your assets. Your monthly income and financial situation will play a part which is why it is advisable to get a bankruptcy lawyer for professional help. The best choice to help lead you through your bankruptcy proceeding is the one that makes the client's needs their first priority. Most of our clients say when their bankruptcy is discharged, they feel the weight of the world leaves their shoulders. 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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