Unexpected medical crises often lead to costly treatments and operations. If you’re missing work due to your injuries, then you may also be struggling to pay the bills. While it may seem impossible to overcome your mounting debt, you do still have some options. Bankruptcy can not only help you discharge your debt, but it can also provide an opportunity to formulate your next steps. But, can you file bankruptcy on medical bills? Let’s find out below.
How Does Bankruptcy Treat Medical Debt?
Essentially, like credit card debt, bankruptcy treats medical bills as unsecured debt. This type of debt is not backed by an actual asset or property. Because of this, medical bills are not given special priority, which means that that they can be discharged through bankruptcy.
If you’re considering filing for bankruptcy on your medical debt, then you will need to decide to file under either Chapter 7 or 13.
Eliminating Medical Bills With Chapter 7
Since nonpriority debt, such as medical bills or credit card debt, is not given special treatment during bankruptcy, you can essentially wipe it out entirely through Chapter 7 bankruptcy. Though Chapter 7 requires that you sell off assets in order to repay your debt, there is a good chance that you do not possess enough assets or property to repay it entirely. In addition, you may even be able to exempt some of your property from liquidation.
However, keep in mind that filing for Chapter 7 will negatively impact your credit score. So, if you plan on buying a house or borrowing money in the near future, then you may want to avoid Chapter 7.
Eliminating Medical Bills With Chapter 13
In contrast to Chapter 7, Chapter 13 bankruptcy does require that you repay a portion of your debt. With Chapter 13, you can restructure your debt into a three to five year payment plan. After your plan ends, then all remaining debt is wiped out. The amount you will pay for your monthly payments depends solely on the amount of debt you owe and your disposable income.
What Happens During a Debt Collection Lawsuit?
Your creditor may file a debt collection lawsuit against you in an effort to reclaim their money. Unfortunately, the court typically sides with the creditor so long as they can prove that you owe them money.
Once the lawsuit is in place, your creditor can take aggressive debt collection actions against you. These actions can include garnishing your wages, levying your bank account, and placing liens on your property.
If you file for bankruptcy, these aggressive actions must stop immediately. The court will issue an automatic stay that halts any of the actions above. However, if a lien is already placed on your property, then the stay may not lift it. So, the best time to file for bankruptcy is before your creditor files their lawsuit.
Andrade Law Office LLC Is Ready to Help
Can you file bankruptcy on medical bills? Yes, you can. Our experienced legal team at Andrade Law Office LLC has helped numerous clients wipe away their medical debt. Get rid of the stress of insurmountable debt, and get back to your normal self by contacting our office today.