Healthcare costs are one of the most significant expenses Americans face today. It leads many to wonder if medical bankruptcy is an option. After dealing with a medical crisis, even people with health insurance find themselves heavily in debt. Thus, unpaid medical bills constitute one of the principal causes of bankruptcy.
What Is Medical Bankruptcy?
It's important to know that there is no such thing as "medical bankruptcy." Bankruptcy is bankruptcy, and the chapters have more to do with your assets and overall financial situation. Medical bankruptcy describes what happens when someone becomes bankrupt due to medical debt. A quarter to half of all bankruptcies falls into this category.
Another important thing to know about bankruptcy is that it won't just affect your medical bills. This can be good or bad, depending on your point of view.
Chapters of Bankruptcy and Medical Debt
Your bankruptcy petition will require you to list all your debts and assets, no matter how they were incurred. You must disclose your financial situation and turn a significant amount of control over to the bankruptcy court. This occurs regardless of whether you only want to eliminate medical debt.
Your outcomes will depend on which chapter of bankruptcy you file. The Chapter 7 bankruptcy process involves liquidating your assets and paying off your creditors with the proceeds of the liquidation. With Chapter 13, you commit to a repayment plan lasting three to five years. The remaining unsecured debt is discharged at the end of that period.
Depending on your situation, you'll discuss Chapter 7 or 13 with your bankruptcy attorney. They will administer a means test and let you know for which chapter you qualify.
What If My Income Is More Than the Median?
If your income exceeds the state median income, you will need to find another bankruptcy chapter. Chapter 13 bankruptcy reorganizes debt into one monthly payment that lasts between three to five years. Once the payment period ends, the remaining debt will be discharged. Chapter 13 bankruptcy makes debt payments much more manageable for individuals and couples.
The Law Offices Of Mayer & Newton Can Help!
If you're struggling with unmanageable medical debt, we can help! Our bankruptcy lawyers will walk you through the process and ensure you're getting the most out of your bankruptcy. We'll also work with your creditors to make sure they're getting paid and negotiate a reduced payoff if needed. Schedule a free consultation with us today to get started on the road to financial freedom!
Contact us today by calling (865) 328-7993 or through our online contact form.