Cincinnati Bankruptcy Attorney

Archive for the ‘Bankruptcy Medical’ Category

Medical bills are unsecured debt, much like credit cards and signature loans. For this reason, they may be discharged completely in a Chapter 7 bankruptcy if your income is within certain guidelines. Even if you income is too high, however, you may still be able to drastically reduce or eliminate your medical bills in a Chapter 13 bankruptcy.

Discharging Medical Bills in a Chapter 7

A Chapter 7 bankruptcy is the ideal avenue to absolve unsecured debt such as medical bills. The process may be complete in just a few months and the debtor walks away with a clean financial slate regarding their medical bill debts.

Reducing Unsecured Debt in a Chapter 13

If your income is too high to file a Chapter 7 bankruptcy, you still may file Chapter 13. A Chapter 13 bankruptcy is a repayment plan supervised by the court. With a repayment plan, however, you may only have to pay a portion of your unsecured debt, depending on your income and expenses.

Eliminating Liabilities in a Chapter 13

You may find yourself in a Chapter 13 bankruptcy but not have enough disposable income to pay unsecured creditors. If this is the case, you may be able to complete the plan without paying your medical bills and discharging the debt completely.

In the United States, there is no formal medical bankruptcy. However, all medical bills are eligible for either a debt discharge or debt restructuring under both Chapter 7 and Chapter 13 bankruptcy laws.

Dealing with excessive medical bills can be disturbing, but the legal consequences of not being able to pay them can be avoided through bankruptcy.

Facts

More than half of all bankruptcy filings in the United States are due to medical bills that cannot be paid, according to “Health Affairs Medical Journal.” This is due to the medical field often pursuing aggressive collection activity, including lawsuits against people who are unable to pay their bills on time.

Chapter 7 Relief

A Chapter 7 bankruptcy case completely forgives most debts, including all medical bills. However, it does remain on a credit report for 10 years. This dramatically affects one’s ability to get credit even if he filed bankruptcy over medical bills.

Chapter 13 Relief

Chapter 13 is a court-supervised repayment plan of debts which protects the debtor from lawsuits and asset loss due to her financial burdens. All medical bills can be repaid through Chapter 13, sometimes for less than the original debt. Chapter 13 remains on a credit report for 7 years.

History

In 2001, the number of bankruptcy filings due to medical debt burdens was 23 times greater than in 1980.

Insurance

Having medical insurance has not offered a lot of protection to some people forced to file bankruptcy due to health care bills. About 75 percent of people declaring bankruptcy because of medical costs had insurance at the time they incurred the bills they could not pay, according to “Health Affairs Medical Journal.”

Medical bankruptcy occurs when an individual accumulates a large amount of medical debt, often through extensive medical procedures or long hospitalizations.

If you have a large amount of medical debt and are unable to repay it, you may be able to have the debt discharged through Chapter 7 bankruptcy. There are serious consequences to filing bankruptcy, but in some situations, it may be necessary for you to become financial stable again.

Statistics

A report published by Harvard Law School, written by Professor Elizabeth Warren, estimates that 5 million American families filed for bankruptcy in the aftermath of medical debt from 2000 through the first half of 2007.

The report also states that 75 percent of those who responded to the survey claimed that illness led to the filing of bankruptcy even though they had medical insurance at the onset of their medical situation.

Bankruptcy

Filing for bankruptcy based on medical debt is not a separate process from filing personal bankruptcy. Medical debt may be part of a Chapter 7 bankruptcy, which leads to a total discharge of these debts. It may also be part of Chapter 13 bankruptcy, in which you go to court to reorganize your debt and make it easier to pay. During either of these processes, you will need to state why you are filing bankruptcy.

Judgments

If you have medical debt that is unpaid, creditors–including medical creditors–may place a judgment against any assets you own, to the extent allowed by law. An example of this is a creditor placing a lien on a home in an effort to collect the debt. However, you can stop this process by filing bankruptcy, and this is often the reason many file.

Process

To file medical bankruptcy, you might consider hiring a bankruptcy attorney. Although not required under law, the expertise of a bankruptcy attorney can reduce mistakes. To find out the laws regarding bankruptcy in your state and to obtain necessary forms, visit the U.S. Courts Website (See Resources.) State laws on exemptions and qualifications vary.

Results

After filing Chapter 7 medical bankruptcy, a court will rule to discharge the debt. Creditors may protest the proceedings, but this is rare. Most individuals must take financial education courses and may need to work with a consumer credit counseling service before the debt is discharged.

After you receive official notice from the local bankruptcy court of the discharge, you no longer have to repay the medical debt. However, you may have difficulty obtaining new credit and loans for some time after filing bankruptcy. Bankruptcy remains on your credit report for up to 10 years.