Without warning, an injury or sickness can leave you out of work and struggling to pay the bills. Even worse, mounting medical expenses can quickly cause your finances to spiral out of control. But what are your options? Can you file bankruptcy on medical bills?
Yes, you can — medical debt is one of the leading causes of bankruptcy filings. Below, we discuss how bankruptcy treats medical debt, and how it can help you regain your financial footing.
What Can You Expect If You Have Outstanding Medical Debt?
If you have unpaid medical bills, your debt will immediately go to collections. You will then have to deal with harassing phone calls until you resolve your debt. Furthermore, your creditors will more than likely take collection actions against you, including the following:
- Wage garnishment,
- Property liens, and
- Bank account levies.
In short, your creditors will attempt to get your money by force. Fortunately, you can help prevent those measures by filing for bankruptcy.
How Medical Debt Is Handled During Bankruptcy
Similarly to credit card debt, debt from medical bills is considered unsecured since it’s not backed by an actual asset or property. Because of this, your medical debt is not given special priority, which means it can be completely discharged through bankruptcy.
If you choose to file bankruptcy on your medical debt, you two options: Chapter 7 or Chapter 13 bankruptcy. Though both types of bankruptcy offer a way to eliminate or manage your debt, it’s important to weigh the pros and cons of both. To learn more speak to a Paducah Bankruptcy Attorney Today.
Managing Medical Debt Through Chapter 7 or 13 Bankruptcy
When deciding which type of bankruptcy to file under, the help of an experienced bankruptcy lawyer is crucial. That being said, below is a brief rundown of both types.
The quickest and most common form of bankruptcy is Chapter 7, also known as liquidation bankruptcy. Under Chapter 7, you have the opportunity to sell off assets and property in order to repay your debt.
While there’s no limit on the amount of medical debt you can discharge through Chapter 7, there are some filing requirements to be aware of. First, qualifying for Chapter 7 requires you to pass the means test, which will compare your income to the amount of debt that you owe. If your income is too high, you may not be eligible.
With Chapter 13 bankruptcy, you can reorganize your unsecured debts into a monthly payment plan that typically lasts between three to five years. The amount of your monthly payments will depend on your income and expenses. At the end of your plan schedule, any remaining debt is discharged.
In order to qualify for Chapter 13, all you really need is to prove you have a steady income to keep up with your monthly payments. If you can no longer meet those payments, you will need to figure out a different debt relief solution.
Speak to a Paducah Bankruptcy Attorney Today
Can you file bankruptcy on medical bills? With an experienced bankruptcy attorney, you can. To learn more about your options and for help determining the best path forward, contact Farmer & Wright, PLLC today.