Medical Bills Leading to Bankruptcy
If you’re worried that your medical bills are leading you to bankruptcy you may want to get all the facts about your options. Medical bills are a leading cause of bankruptcy, even for people with health insurance.
Injury and illness often lead to a loss of income and time at work. Plus, medical bills may continue for months or years through follow-up doctor's visits, prescription drugs and rehabilitation. Even with insurance and savings, you may quickly find yourself faced with insurmountable medical debt.
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How Do Medical Bills Work in Bankruptcy?
These days, it’s not that uncommon for Americans to find their medical bills leading to bankruptcy. So how, exactly, is bankruptcy able to wipe out medical debt? Here are some basics.
- Medical bills in Chapter 7 bankruptcy: Chapter 7 bankruptcy grants filers a full discharge of their eligible unsecured debts, which includes medical bills. In other words, if you successfully file a Chapter 7 case, your debts tied to things like credit cards and medical expenses that were included in your bankruptcy are wiped out. Medical bills are eligible for discharge, so if you file Chapter 7, your medical bills may be cleared in only a few months.
- Medical bills in Chapter 13 bankruptcy: Chapter 13 bankruptcy tends to work better for filers who have significant assets they want to protect (which might include a home, a car, family heirlooms, etc.). In order to make Chapter 13 bankruptcy work, you must have a dependable source of income because Chapter 13 requires filers to make monthly payments according to a court-approved plan. You may be able to eliminate or reduce debt tied to medical bills and your home mortgage, car loans, credit cards and more with this type of bankruptcy.
How Do I Know if My Medical Bills are Leading to Bankruptcy?
There are certain issues that lead many people to file for bankruptcy. These include:
- Creditor contact: If you’re fielding calls or receiving mail from creditors or debt collectors on a fairly regular basis but are unable to make the payments requested, the bankruptcy Automatic Stay may quickly end this.
- Reliance on credit cards: If you’ve found yourself turning to credit cards to buy necessities and/or are only able (or almost unable) to make the minimum payment on your credit cards each month then filing may help you get control of your finances.
- Financial setback: If you’ve recently lost your job (whether for a reason related to your medical bills, like illness or injury, or for another reason), gotten divorced, or otherwise experienced an unexpected financial setback, bankruptcy may clear the slate so you can get a fresh start.
Speak with a Lawyer about Medical Bills & Bankruptcy
If mounting medical bills are keeping you up at night, take action now to get some relief. Speak with a lawyer near to find out whether your medical bills might be leading to bankruptcy.