Medical Debt and Bankruptcy
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Filed under: Medical Debt
Medical debt can add up quickly, especially at a vulnerable time in your life. Medical debt is one of the top reasons people file for bankruptcy. Even if you have medical insurance, major surgeries or uncovered medical costs like preexisting illness can ruin your financial stability.
Uninsured or underinsured Americans worry if they should go to the hospital with what seems like life-threatening illnesses or take the wait and see approach to their health to avoid being burdened with substantial medical bills.
Unsecured Debt
Medical debt is considered unsecured debt and can be eliminated in bankruptcy. Other forms of unsecured debt are credit card debt and loans.
When you are filling out your paperwork for bankruptcy, you are required to list all of your debts and income. Other unsecured debt will also be eliminated when you file for bankruptcy, not just medical debt. Depending on the type of bankruptcy you file will determine how much and how soon your debt will be eliminated.
Chapter 7 Bankruptcy
If you pass the means test and qualify for a Chapter 7 bankruptcy, you can have your medical debt discharged in bankruptcy in as little as three to six months. Although unlikely, if you have nonexempt assets, the court-appointed trustee may sell those assets to pay your creditors.
Chapter 13 Bankruptcy
If you have assets you want to keep such as a home or vehicle, you may want to file a Chapter 13 bankruptcy. This type of bankruptcy will reorganize your debt and allow you to make repayments for a period of three to five years. Your medical debt will be lumped in with other debt, and at the end of the repayment period, any remaining debt will be eliminated.
If you have medical debt and are unable to keep up with repayment plans on your own, consider talking to a Dallas bankruptcy attorney to find out what options are best suited to your unique needs.