Filing for bankruptcy can be a very hard and confusing process. If you have medical debt, you may be wondering if it is possible to get rid of your medical debts through bankruptcy. The answer is yes, but there are different ways to do so depending on the type of bankruptcy that you file for. In this blog post, we will explain how Chapter 7 and Chapter 13 bankruptcies work with medical debt and discuss other ways of getting rid of medical debt without filing for bankruptcy.
In a Chapter 7 bankruptcy, your non-exempt assets are liquidated in order to pay off creditors. Non-exempt assets are those that are not protected by the government against being sold or used as payment toward your debts. Medical bills that fall into this category can be avoided through a Chapter 7 bankruptcy because they are unsecured debts, meaning they are not backed by any physical collateral. However, before filing a Chapter 7 bankruptcy, you must pass a means test which takes into consideration your income level in relation to the median income in your state.
Unlike a Chapter 7 bankruptcy, where all non-exempt assets are liquidated immediately, a Chapter 13 reorganizes your debts into a repayment plan over three to five years. During this time period, you make monthly payments towards your debt until it is paid off in full. With certain types of secured debts like student loans or mortgage loans, some or all of the remaining balance can be discharged after completion of the repayment plan. However, with unsecured debts like medical bills, this is not usually the case. Even after completing payments under a Chapter 13 plan, most medical bills remain unpaid upon completion of the repayment plan and must be paid off in full during its duration.
If filing for bankruptcy is not an option for you due to income restrictions or other factors, there are other ways to get rid of medical debt without filing for bankruptcy, such as seeking out grants or scholarships from organizations dedicated to helping those with money problems. Negotiating directly with creditors for reduced payments or settlements on outstanding balances may be another way to reduce or get rid of these debts. Additionally, many states have laws that require hospitals and healthcare providers to provide discounts on services based on patient income levels, so it’s important to explore all available options before making any decisions about how best to handle your medical debt situation.
Medical debt can be overwhelming and even debilitating at times, but there are steps that can be taken towards resolving it without resorting to drastic measures. Depending on the type of medical bill and individual circumstances, there may be options beyond just declaring bankruptcy, so it’s important that anyone considering filing should thoroughly discuss their options with an experienced lawyer who specializes in bankruptcies before making any decisions. With proper guidance and planning, it’s possible to get relief from overwhelming medical bills while still maintaining stability going forward. Contact attorney Karen Evangelista for a consultation to help with any money worries you may be facing.