Can I File Bankruptcy for Medical Bills?
Kansas City Attorney Explains How Bankruptcy Can Help with Medical Debt
Medical debt is a common problem. The rise of healthcare costs (and scarcity of adequate health insurance) is creating serious financial troubles for people everywhere. Even the most financially prudent find their households turned upside down by the unexpected expense of a medical emergency or the onset of a serious illness.
Don’t allow the perceived stigma of bankruptcy to prevent you from educating yourself on the bankruptcy process. In our experience, when prospective clients learn about options for their debts (including Chapter 7 or Chapter 13 bankruptcy), that information can bring a great sense of relief. With over 30 years of experience, Neil Sader and the attorneys at The Sader Law Firm certainly understand the toll medical debt can take on your life and want to help alleviate your financial stress as soon as possible. Not sure if it’s time to talk to us yet? Take our brief Bankruptcy Warning Signs quiz to see if you’re reached the point where talking to an attorney might be helpful.
Will Bankruptcy Discharge My Medical Debt?
The type of bankruptcy you file will determine what happens to your medical bills. During a consultation, an attorney will help you evaluate which type of bankruptcy best suits your personal situation. Here are the two different avenues available to prospective clients to resolve medical debts through bankruptcy.
- Chapter 7: In this bankruptcy, the filer is allowed to discharge all unsecured debt, surrender and discharge unnecessary or unaffordable secured debt and do so in approximately four months. There’s not a financial limit on the amount a filer can discharge through this type of bankruptcy. At the end of the proceedings, the filer’s unsecured debts— credit card debt, some back taxes, wage garnishments, auto repossession and medical expenses—are discharged. The filer can keep all property he or she owns so long as they are under the state-imposed exemption limits. During the process, the filer’s assets are reviewed. Though it’s sometimes called “liquid bankruptcy”, it’s rare that personal assets are liquidated.
- Chapter 13: In a Chapter 13 bankruptcy, the filer’s debts are classified and a portion of that debt is repaid. This is sometimes referred to as “reorganization bankruptcy.” The filer restructures a portion of their debts into more manageable payments over a longer period, typically three to five years. The filer’s unsecured debt may or may not be paid back during this time. This depends on the filer’s income. At the end of the payment plan, all debt, whether repaid or not, is discharged. This type of bankruptcy is best for those filers facing issues with not only medical debt, but high car payments or past due mortgage payments.
Note that with a Chapter 7 bankruptcy, debtors discharge their medical expenses along with all other unsecured debts. In a Chapter 13 bankruptcy, medical bills are included with any other debts in a partial repayment plan. If you file bankruptcy through a Chapter 13, the amount you will pay to creditors then depends on your income, expenses and non-exempt assets. There are many individual considerations to account for with this type of bankruptcy, so the only way to know for sure how a Chapter 13 could affect your financial situation is to consult with a Kansas and Missouri bankruptcy law firm.
Can I File Bankruptcy for Just My Medical Bills?
You might have heard the term “medical bankruptcy” in passing, which implies you can file bankruptcy for only medical debt. Since the bankruptcy process is designed to be fair to both debtors and creditors, there’s no pick-and-choose scenario for filers. Therefore, whether you file for Chapter 7 or Chapter 13, all debts are included when you file. Just like you can’t file bankruptcy for just credit card debts, medical bills need to be filed with together with other debts and then be discharged at the end of Chapter 7 or put into a reorganized payment plan with Chapter 13.
More Questions? Call Our Kansas and Missouri Bankruptcy Law Firm
Medical costs imply there are also physical challenges in your life due to ongoing treatment or recovery. Wondering whether you will lose everything due to medical bills is unnecessary. Call us for a free financial consultation and let us answer your questions! If bankruptcy isn’t a good option for you, we will tell you. But if filing bankruptcy can set you up for future financial success, we’ll put our experience to work and help you begin to put all the financial stress and frustration behind you during this time in your life.
The Sader Law Firm helps clients from all over Kansas and Missouri find ideal solutions to their financial difficulties. Call us for a free phone consultation at (816) 281-6349 or contact us online so we can get started.