Yes, you can have most or all your medical bills eliminated through personal bankruptcy. In fact, medical bills are one of the primary reasons that individuals seek bankruptcy. You can get rid of medical debt and start fresh through Chapter 7 or Chapter 13 bankruptcy.
Medical Bills Are Unsecured Debt
There are various types of debt that are generally handled differently in bankruptcy. Unsecured debt, such as medical bills, is not backed by any type of collateral or actual property. Secured debt, such as a mortgage or car loan, is supported by specific assets.
When you file bankruptcy, you may be forced to sell property to pay off secured debt. However, unsecured debt is often completely discharged without having to liquidate or sell off anything. This is most common in Chapter 7 bankruptcies.
Can Medical Bills Be Eliminated Through Chapter 7?
The quickest and easiest way to get rid of medical debt is through a Chapter 7 bankruptcy. You will be able to eliminate all or most of your unsecured medical debt while starting with a fresh financial record.
A Chapter 7 bankruptcy, often called “liquidation bankruptcy,” allows you to sell certain assets to pay off some creditors. Other debts, such as medical debt, will likely be eliminated without having to pay anything.
It’s important to know that Chapter 7 will still show up on your credit report for up to 10 years. However, having a bankruptcy on your credit report is often better than many delinquent and overdue debts. In many cases, filing for Chapter 7 will increase your credit score over time.
Can Medical Bills Be Eliminated Through Chapter 13?
You can still have medical bills eliminated through a Chapter 13 bankruptcy, but it can take more time and may be more complex than with a Chapter 7. Chapter 13, often called “reorganization bankruptcy,” allows you to create a court-approved three- to five-year payment plan to pay off debts.
Your medical bills would be combined with other debts and paid off slowly. There are certain situations where your medical bills may still be discharged through a Chapter 13 instead of paying them through the payment plan. Every Chapter 13 is different. However, in the end, you will achieve the same goal – elimination of medical bills.
Can I Limit My Bankruptcy to Only Medical Bills?
No, you cannot file bankruptcy and only include medical bills. However, if there are specific items you’d like to exclude, such as a home or car, you may be able to keep those through your bankruptcy. Each state has certain exemptions available for those who file bankruptcy. Your bankruptcy lawyer can help you understand if your property would be eligible for an exemption so that you can keep it.
Other Options to Get Rid of Medical Debt
If bankruptcy is not right for you, you may be able to find another option to get rid of medical debt. Debt relief attorneys can help you explore your options, which may include:
- Negotiating a Lower Cost – If you are self pay or qualify for patient assistance, the hospital or medical provider may reduce the cost of your overall services. This may make things more affordable for you.
- Financial Assistance – Many hospitals and doctors have patient assistance options for people who are low or moderate income. In fact, you may be eligible for financial assistance if you make 400% or more of the federal poverty level.
- Payment Plans – Medical providers are almost always willing to work out a payment plan to help reduce what you owe. These plans are typically low or no interest and can help you avoid bankruptcy.
- Audit Your Bills – You should always check your medical bills for errors or unauthorized charges. Sometimes your insurance will have already paid for covered expenses. These mistakes should be brought to the attention of the billing office and eliminated from your medical bills.
- Low Interest Credit Cards and Loans – If you are facing significant medical debt with hefty interest rates or have already been sent to collections, you might consider low interest credit to pay off those bills. If you can find a personal loan or card that is 0% interest, it will give you time to put a dent in your medical debt.
Get Rid of Medical Debt Today
More than half of Americans have some type of medical debt. In fact, most bankruptcies include a significant amount of medical bills. If you are facing a similar situation, the experienced bankruptcy lawyers at Clark & Washington can help. We know this situation is complex and you just want to get back on your feet.
Call us today at (865) 689-1777 for a case consultation of your specific situation.