Medical bills can be a major source of financial stress, and you may be wondering if bankruptcy can help alleviate this burden. The good news is that bankruptcy can discharge medical bills, along with other types of debt like credit cards and student loans. However, the specific process and outcome will depend on the type of bankruptcy you file.
If you're considering bankruptcy, it's important to understand the differences between Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy is a liquidation process that can discharge most unsecured debts, including medical bills and credit card debt. However, it may not be able to discharge student loans. Chapter 13 bankruptcy, on the other hand, is a repayment plan that can help you manage your debts over a period of three to five years, including medical bills, credit cards, and even some types of student loans.
It's important to note that filing for bankruptcy can have long-term consequences, such as a negative impact on your credit score. However, it can also provide a fresh start and relief from overwhelming debt. To determine the best option for your specific situation, it may be helpful to use a calculator that compares bankruptcy to other debt relief options, such as debt settlement, debt management, and debt payoff planning.
Can You File Bankruptcy On Medical Bills?
Yep, you heard it right: filing bankruptcy on medical bills is possible! Medical bills are actually unsecured debts that can be included in bankruptcy. It’s a common reason why people file for bankruptcy relief. Medical hardship is most prevalent for those aged 18-64 without healthcare, according to a study from August 2019. This is due to the rise of high deductible plans and high out-of-pocket medical expenses for patients. However, filing for a medical bankruptcy may not be the best debt-relief solution if medical bills are the only reason for filing for Chapter 7 or Chapter 13. Let’s look at the details of medical bills and bankruptcy.
Unsecured debts are debts that you owe, which are not secured by collateral. Medical bills generally fall into this category. Other debts included in this category are credit card debts, personal loans, student loans, alimony, most taxes, old utility bills, and child support payments. However, not all unsecured debts are eligible for a discharge. For example, you cannot get rid of alimony and child support by filing bankruptcy. Most taxes and student loans are also not eligible for discharge in bankruptcy. However, medical bills are generally always dischargeable in bankruptcy.
By the way, you must qualify for Chapter 7 bankruptcy, which is the more common consumer bankruptcy. To check whether you qualify, use the Chapter 7 bankruptcy qualification estimate calculator based on the US bankruptcy forms below to estimate whether you may qualify for a Chapter 7 bankruptcy to eliminate medical debt.
Also, check out this related article: Is There Medical Debt Forgiveness for the Disabled?
Filing Chapter 7 Bankruptcy to Get Rid of Medical Bills
When you file for Chapter 7 bankruptcy, most of your unsecured debts are discharged, which means that you are no longer legally obligated to repay them. This includes debts like credit card bills, medical bills, and personal loans. After filing, creditors are prohibited from taking any actions to collect these debts, such as calling you or filing a lawsuit. Most Chapter 7 cases in the US are no-asset cases, which means that the debtor does not lose any property. These cases usually take four to six months to complete.
However, it's important to note that there is a possibility of losing property in Chapter 7 cases. The Chapter 7 trustee may sell some of your property to pay off your unsecured debts. Before filing for bankruptcy, it's important to determine whether any of your property is at risk of being sold. Bankruptcy exemptions can protect some of your assets, but if you have significant equity in your home, car, or other personal assets, Chapter 7 may not be the best option for you. It's important to consider all of your options before filing for bankruptcy to ensure that you make the best decision for your financial situation.
Filing Chapter 13 Bankruptcy to Get Rid Medical Bills
Have you ever heard of Chapter 13 bankruptcy? It's a repayment plan that can help you manage your debts. Here's how it works: you enter into a three to five-year plan where you repay your debts. While you won't pay the full amount owed to unsecured creditors, you'll pay a small percentage of the debt. Once the plan is complete, any remaining unsecured debt is discharged, as long as it's eligible for bankruptcy discharge. This means that your legal liability to repay the remaining debt is eliminated.
Chapter 13 is a great option for those who don't qualify for Chapter 7 bankruptcy due to income. It's also a good choice if you own property that could be sold in Chapter 7, have non-dischargeable debts, or are behind on mortgage or car payments. However, there are downsides to consider. The repayment plan is long, typically lasting 60 months. If you don't complete the plan, you won't receive a discharge, and you'll continue to owe all the debts you had before filing for bankruptcy relief.
Are There Other Options to Repay Medical Debts?
If you're struggling to pay off medical debts, don't worry. There are other ways to get relief. One option is to work with a debt relief company or try settling your medical debts. You can negotiate with your creditors to come up with a repayment plan that fits your budget. You might even be able to settle the debt with a one-time lump sum payment that's less than what you owe. If bankruptcy seems like your only option, know that there are other ways to repay your medical bills without filing for Chapter 7 or Chapter 13 bankruptcy.
Settling your medical debts can be a great way to get relief. You can work with a debt relief company to negotiate a payment plan that works for you. This can help you avoid bankruptcy and get back on track financially. You can also try negotiating a lump sum payment with your creditors. This can be a good option if you have some money saved up and want to pay off your debts quickly. Debt consolidation is another option to consider. This involves combining all of your debts into one monthly payment, which can make it easier to manage your finances.
Remember, there are many options available to help you repay your medical debts. Don't give up hope. With a little research and effort, you can find a solution that works for you.
Compare your options
Are you struggling with debt and unsure of your options? Look no further than our Chapter 7 calculator! Our tool is designed to help you estimate your Chapter 7 qualification and compare different debt payoff options. With our calculator, you can make an informed decision about your debt payoff strategy.
Here's what our calculator does:
- Compares different options, including Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Debt Settlement, Debt Management, and Debt Payoff Planning.
- Takes between 2-10 minutes, depending on the level of detail you want.
- Estimates costs, pros and cons, and options for each of the options.
- Provides assumptions behind the estimates.
- Gives you the opportunity for a complimentary review of your data.
Our Chapter 7 calculator is easy to use and provides valuable insights into your debt payoff options. Check it out below!