Filing Chapter 7 Bankruptcy: Credit Card and Medical Debt

Credit card and medical debt are the two biggest engines that are driving people to file bankruptcy. Both are considered to be unsecured debt because there is no collateral to back the money. This type of debt will follow someone around for years, crippling their finances. The only way to get rid of it quickly is bankruptcy. Most people will choose for filing chapter 7 bankruptcy as it means a complete elimination of debt.

Being Pushed to the Edge by Medical and Credit Card Debt

More and more people are living at the edge of their budget ropes, pushed there by unscrupulous credit card companies. What may have been manageable amounts were turned into ballooning balances by sudden hikes in interest rates. Someone who had a reasonable 12% APR saw it go to 20% or more despite their being responsible about payments and use. Why did this happen? The US government passed legislation to protect the consumer, but didn't make it so that the laws were enacted right away. This gave the credit card companies an opportunity to squeeze as much money out of consumers before the opportunity was lost. So what could have been paid off in less than a few years actually doubled, keeping the card owner in debt for far longer.

Medical debt is the other reason more and more people are filing chapter 7 bankruptcy. Health insurance companies will do what they can to pay out as little as possible on their policies. And there are times that the patient doesn't find this out until after the procedure, having been assured beforehand that insurance will cover everything. Couple this with the ever-rising cost of health care and you see a perfect storm for the patient being created. The patient needs the procedure performed for a quality of life issue and will be stuck with a bill they cannot possibly pay off in the near future. Doctor's offices and hospitals will negotiate, but will not hesitate to drop the legal boom on you if you find yourself unable to make a payment.

Filing for Bankruptcy

Finding that your debt outstrips your ability to pay can allow you to file for chapter 7 bankruptcy. As much as you may cringe at the thought of the thought, you need to ask how long will you be able to pay the debts? Can you handle it for years to come? Or is the better solution being able to wipe out the debt and get out from underneath its burden?

Making the Decision

It's best to consult with a lawyer before taking the step. Ask questions during a consultation, listen to the answers and advice that's given, and move on from there. An experienced bankruptcy attorney will have seen cases similar to yours and be able to help guide you towards making the choice that's best for you.