Sunday, December 10, 2017

Bankruptcy and Medical Debts

Will my medical debts be eliminated in Chapter 7 bankruptcy?

With ever rising healthcare costs, medical expenses have become a major cause of debt for many Americans.  According to at least one study by NerdWallet Health, which analyzed data from the U.S. Census, Centers for Disease Control, and federal courts, health care is now the number one cause of bankruptcy filings.  If you are drowning in medical debt, Chapter 7 bankruptcy could provide you the relief you need to start over financially.  

Medical Bills Are Unsecured Debt

Debts will be treated differently in a Chapter 7 bankruptcy according to their classification.  Secured debts are those debts that are attached or secured by your property.  Typically, these debts include mortgages and car loans.  Secured debts will not be eliminated in a bankruptcy.

Unsecured debts, on the other hand, are not secured by a piece of property.  Medical bills will generally fall into this debt category.  When you seek medical treatment, be it at a hospital or another physician’s office, you will not usually be asked to guarantee the debt with property.  Even further, medical debts are not considered priority debts.  Priority debts, like taxes and alimony or child support, are not typically subject to discharge in a Chapter 7 bankruptcy.

Medical bills, as unsecured, nonpriority debts, will normally be discharged in a Chapter 7 bankruptcy.  You will first need to qualify for a Chapter 7 bankruptcy, which will require that you pass the income means test.  If you have significant assets or earn a lot each month, you will face hurdles in filing for Chapter 7.  At times, you may still be able to qualify if you can demonstrate that most of your assets or income are going towards your debts.

Get Started With Your Chapter 7 Bankruptcy Now

Anyone who is overwhelmed by medical debt should contact a bankruptcy attorney for help assessing whether Chapter 7 is a viable option for them.  You can jumpstart the process by gathering information about your medical debts to bring to your consultation.  You can escape from under the burden of medical debt and start over financially; take action towards your brighter future today.

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