Chapter 7 bankruptcy does not wipe out all debts. However, if you have lots of medical bills you cannot afford to pay, you may find relief by filing for bankruptcy. Some kinds of debts, such as recent federal taxes, court fines, alimony, the majority of student loans, and child support, cannot be discharged. However, this is not the case with medical debts. After the completion of the bankruptcy process, these debts will not be your concern anymore. If you are not sure about this, you can get advice and assistance from an attorney at the Law Office of Corey L. Mills.
Chapter 7: Bankruptcy and Medical Bills
A Chapter 7 bankruptcy filing can divide your financial obligations into categories. Your secured debts as well as the priority unsecured debts mentioned above will remain. Thankfully, unpaid medical bills do not fall into these categories. Medical bills are non-priority unsecured debts that are eligible for a Chapter 7 discharge. This is the case, no matter how big your medical bills are.
Eliminating Your Medical Bills
The term “medical bankruptcy” is quite common, but the U.S. Bankruptcy Code does not cover this kind of filing. Although you can eliminate your outstanding medical bills by filing for Chapter 7 bankruptcy, you can’t choose the debts you can include in your claim. All your debts and assets must be disclosed if you want a successful discharge. Also, non-disclosure can lead to criminal charges.
Aside from medical debts, Chapter 7 can also eliminate other debts. With this filing, you will no longer be responsible for repaying personal loans, utility bills, and credit card charges.
Who is Eligible for Chapter 7 Bankruptcy?
Those who have mounting medical bills should qualify for Chapter 7 bankruptcy. But there is a bankruptcy test to pass. This test compares your living expenses and average household income to calculate your monthly disposable income. For a lot of debtors, such a test is just a formality. If your monthly disposable income is more than the state median level, you may want to consider Chapter 13 bankruptcy instead.
Chapter 13 bankruptcy allows the consolidation and gradual repayment of your debts through a payment plan. This plan includes your medical debts. How much repayment you must make depends on your assets, income, and expenses. Also, your creditors get a small percentage of the amount you pay towards the debts. But if your total debts, including medical debts, are more than the specified debt limits, you may not qualify for Chapter 13 bankruptcy.