Medical bills are one of the top sources of unpaid debts in the U.S. According to a recent academic study, two-thirds of the people who file for bankruptcy cite medical issues as one of the key factors that led to their decision. Expensive medical treatment can have a compound financial effect on patients:
- Patients may lack adequate health insurance coverage or savings to pay for an unexpected health problem.
- The patient may lose income if the injury causes a temporary or permanent disability that prevents them from returning to work.
If your healthcare debt becomes overwhelming, bankruptcy allows you to discharge your unpaid medical bills or repay them perhaps at a reduced cost.
When to Consider Bankruptcy
If you have good credit and little debt other than your medical bills, you should explore repayment alternatives before choosing bankruptcy. You may qualify for an assistance program that will reduce what you owe. However, some hospitals do not offer assistance programs, while others may have strict income limits to qualify. You also must consider your ability to repay other debts, such as credit cards and a home mortgage. Bankruptcy is a means of managing all of your creditors at once and can be an excellent strategy to help get you back on track
How Bankruptcy Helps
Whether it is Chapter 7 or Chapter 13, you may be able to reduce or eliminate your medical bills by filing for bankruptcy. If you qualify for Chapter 7 bankruptcy, your medical bills will be eligible for discharge at the end of the process because they are unsecured debts. If you paid for your medical bills with a credit card, the credit card debt is also eligible for discharge.
Even if you do not qualify for Chapter 7 bankruptcy, you will likely pay less than what you owe if you file for Chapter 13 bankruptcy. Your monthly payments are based on your income and allowable expenses that determine your disposable income, which is any income left over after those allowable expenses. From that disposable income, secured creditors and priority unsecured creditors must be paid before general unsecured creditors, which includes creditors collecting on medical bills. However, a general unsecured creditor cannot receive less than it would have through Chapter 7 bankruptcy.
Contact a Frisco, Texas, Bankruptcy Attorney
When faced with a medical emergency, you are more concerned about the wellbeing of yourself or your loved ones than the debt you may incur. A Denton County bankruptcy lawyer at The Page Law Firm can explain how bankruptcy may help you when you cannot afford to repay your medical bills. To schedule a free consultation, call 214-618-2101.