How Bankruptcy Can Help with Creditors and Medical Bills

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At what point does bankruptcy become not only something you have been thinking about, but an attractive, viable alternative to your crushing debt? When your mounting debt has a root cause in a medical issue, bankruptcy can help you deal with creditors and medical bills and get a fresh start.

What is Bankruptcy?

It is a legal process through which you announce publicly that you are unable to pay your debts and where you may obtain relief from debt obligations, called a "discharge". Chapter 7 and Chapter 13 are the two most common types of bankruptcies filed for non-business debt relief. Depending on which type you file, be aware that you may have debt that cannot be discharged in the bankruptcy and that you will still be responsible for when the bankruptcy is over. This includes:

  • Child support and alimony
  • Certain back taxes
  • Government funded or guaranteed student loans
  • Government imposed fines and penalties
  • Debt related to willfully causing personal injury to another person

Can Medical Bills be Discharged?

Medical bills are a type of unsecured credit, which means that the debt is not secured by a lien against property or other collateral. Home mortgages and car loans are examples of secured debt. Unsecured debt, such as credit card and medical bills can be discharged in a bankruptcy filing. However, if you are filing Chapter 7 it is possible for unsecured creditors to object to having the debt you owe them included in your bankruptcy through a complaint process called an Adversary Proceeding.

Medical Debt and Bankruptcy

Large percentages of Americans who have filed bankruptcy in recent years have cited medical bills as one of their reasons for doing so, although statistics from the US Department of Justice shows that only about 13% percent of the debt discharged in bankruptcy is specifically medical. But if you are a family or an individual who has had to miss a credit card payment because you have no health insurance and your last sinus infection set you back about $275 between the doctor visit and the prescriptions - then you can easily understand how medical bills can quickly impact your overall finances and perhaps start the slide into bankruptcy.

Often bankruptcy is the low point in a downward spiral that can be traced back to job loss, prolonged unemployment, and unexpected emergencies that leave astronomical bills in their wake.

Get Legal Help

Bankruptcy can help you handle creditors and medical debt; talk to a local attorney who practices in the area of bankruptcy law. They can explain how your state laws will affect your case and which type of bankruptcy may be the right one to give you an opportunity to rebuild your financial future.