Without any warning, a medical emergency may leave you struggling to pay the bills. With your medical debt spiraling out of control, you may be looking for a way out. Can you file bankruptcy on medical bills?
Yes. In fact, debt from medical bills is one of the leading reasons that people file for bankruptcy. Understanding the issue of juggling debt and a medical injury, our seasoned bankruptcy attorney at Benson Law Firm is here to help.
The Lasting Consequences of Overdue Medical Debt
Once you cross over to overdue medical debt, your case will go directly to collections. From there, you can expect call after call from your creditors until your debt is settled. In addition to this harassment, your creditors may employ the following debt collection methods:
- Property liens,
- Bank account levies, and
- Wage garnishment.
Essentially, your creditors will attempt to forcefully collect your money. Fortunately, bankruptcy can halt the above methods.
How Bankruptcy Handles Medical Debt
Bankruptcy court treats medical debt as unsecured debt. Similarly to credit card debt, this type of debt is not backed by a tangible asset or property. Because of this fact, medical bills are not given special priority, which means that they are dischargeable through bankruptcy.
If you want to file for bankruptcy, you will need to decide to file under either Chapter 7 or 13. While both of these bankruptcies offer a chance to eliminate medical debt, the methods behind both are different.
Discharging Medical Debt Under Chapter 7
Without a doubt the most common and quickest form of bankruptcy is Chapter 7. This is because it allows individuals to sell off their assets and property in order to repay a portion of their debt. Though it only takes between four to six months to complete, you can only file for Chapter 7 if you pass the “Means Test”, which basically compares your income to debt ratio.
Discharging Medical Debt Under Chapter 13
Though not as quick as Chapter 7, Chapter 13 is more accessible to a wider range of people. In fact, if you failed to qualify for Chapter 7, then you will more than likely qualify for Chapter 13. With this type of bankruptcy, you can restructure your debt into an affordable payment plan. Typically, this plan will last from three to five years in total. After your plan reaches its expiration date, any debt remaining is then discharged.
Should You File for Chapter 7 or 13?
Chapter 7 is quicker and more common, however it will more negatively impact your credit rating, and it will remain on your credit history much longer. In comparison, Chapter 13 is more time-consuming and expensive, however the filing requirements are less strict than Chapter 7. Speak with your bankruptcy attorney to figure out which is right for your situation.
Benson Law Firm is Ready to Help
Can you file bankruptcy on medical bills? Affirmative. At Benson Law Firm, we’ve helped numerous clients eliminate their medical debt and obtain a fresh financial start. Contact us today.