Medical treatment is expensive. Individuals who do not have sufficient health insurance to cover their treatment expenses or enough money to pay for them out of pocket can easily find themselves in debt after receiving medical care. Sometimes, there is no option other than taking on sufficient debt to receive necessary medical care.
When an individual with medical debt files for bankruptcy, he or she can have the debt discharged through bankruptcy. In fact, medical debt is one of the most common reasons why Americans file for bankruptcy. If you are facing a level of medical debt that you cannot repay on your own, consider filing for Chapter 7 or Chapter 13 bankruptcy to eliminate it.
Medical Bills are General Unsecured Debts
When an individual files for bankruptcy, his or her debts are separated into different categories. One of these categories, unsecured debt, is debt for which the individual did not pledge collateral in exchange for the debt. An example of secured debt is a mortgage because with a mortgage, the borrower stands to lose his or her home if he or she does not pay. With medical debt, there is no way to take back the treatment the individual received.
This means that in a bankruptcy case, medical debt can be handled just like credit card debt and other types of personal debt, like unpaid utility bills.
Medical Debt in Chapter 7 versus Chapter 13 Bankruptcy Cases
How medical debt is handled in bankruptcy depends on the chapter the individual files. With Chapter 7 bankruptcy, individuals who pass the Means Test can have their debt eliminated through liquidation, which is the selling of the individual’s nonexempt assets to turn a profit, which is paid to his or her creditors. With Chapter 13, the individual works with his or her bankruptcy trustee to pay back debt over the course of three to five years, after which outstanding debts are generally discharged.
In both of these scenarios, medical debt is lumped with other unsecured debts to be repaid through bankruptcy. So, if you are struggling with both credit card debt and medical debt, do not assume you will have to file two different bankruptcy petitions. When you file for bankruptcy, you can work through all of your nonexempt debts at once to free yourself from their burden.
Work with an Experienced Arlington Heights Bankruptcy Lawyer
Medical debt can seem insurmountable, but remember that bankruptcy is always an option if you are struggling with making your payments. Contact our team of experienced Arlington Heights bankruptcy attorneys at Newland & Newland, LLP today to set up your initial consultation with a member of our firm, during which we can help you determine the most effective way to tackle your medical debt. Depending on your circumstances, bankruptcy might or might not be the right course of action for you. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.
(image courtesy of Hush Naidoo)