If you have become disabled, you may face a host of expenses that you just can't pay. You may be unable to work as a result of the disability you have suffered, so your income may have dropped dramatically or be non-existent. Depending on how you became disabled and what care you require, the medical bills may also be mounting. As such, you may wonder if there are any bankruptcy disability benefits or if you will be able to file bankruptcy because of your disability.
Filing Bankruptcy with a Disability
When you file bankruptcy with a disability, there are no special rules- you simply follow the same bankruptcy code as anyone else. This means that, initially you must make a choice between filing chapter 7 bankruptcy and chapter 13 bankruptcy:
- Chapter 7 requires you to pass an income test, showing you make less than the median in your state or that your disposable income isn't sufficient to pay your debts and your cost-of-living expenses. If you are disabled and not earning income and/or if you have high expenses required to tending to your medical needs, you may qualify for chapter 7. If so, non-exempt assets are sold and the proceeds used to pay the debts you owe. Debts that remain unpaid after the asset sale, including medical debts, are forgiven (with some exceptions, such as student loan debt and tax debt that usually can't be forgiven)
- Chapter 13 is appropriate for those who can't pass the means test because they make too much money. With a chapter 13, none of your assets are taken. You will, however, have to create a repayment plan wherein some of your debts are repaid over 3-5 years. You'll make these monthly payments to a bankruptcy trustee who will distribute the cash to your creditors.
With either chapter 7 or chapter 13, medical bills can be eliminated or reduced, allowing you to use your income for the things that you need to take care of yourself now.
Getting Legal Help
Before filing for bankruptcy, you should consult with a qualified lawyer. Your attorney can explain to you what type of bankruptcy you are eligible for and can assist you throughout every step of the filing process. He may also be able to advise you on programs you can enter to increase your income and to stave off bankruptcy- such as social security disability benefits or SSI programs that exist to help disabled individuals.