When overdue medical bills are coming in the mail and there is no way that the debt can be paid, it’s time to see how bankruptcy can help. If you are injured, or you accrued medical bills because of an illness, you may find yourself overwhelmed with even trying to pay the bare minimum every month to keep credit collectors at bay.

Unsecured Debt and Filing For Bankruptcy

Medical debt is considered unsecured debt, and it is treated like credit card debt when you file for bankruptcy. As long as you qualify and pass the means test to file for chapter 7 bankruptcy, your medical debt will get wiped out once your bankruptcy is complete. You can file medical debt bankruptcy when you clearly don’t have the ability to pay the debt back and your overall debt is out of control.

Qualifying for Chapter 7 Bankruptcy

medical debt causing bankruptcy

You take a means test in order to prove that you are not able to pay back your medical debt. If your income for the last six months is below the mean average for your state, then you automatically qualify to file for a chapter 7 bankruptcy to deal with all of your unsecured debt. When your income is higher than the mean average in your state, you’ll need to complete the entire means test. In general, when your monthly bills are higher than your income, you qualify to file a chapter 7 bankruptcy.

Medical Debt and Chapter 13 Bankruptcy

Even when you don’t qualify for a chapter 7 bankruptcy, you can file for a chapter 13 bankruptcy instead. This is when you take all of your unsecured debt and create a payment plan based on what you can afford every month. All of your creditors will receive a percentage of the amount you pay back, including your medical creditors. This usually means that your creditors will get only pennies on every dollar that you owe, and your debt will be taken care of.

Learn More About Bankruptcy Options

When you are not able to pay for your rising medical bills every month, it’s time to consider your options. If medical bills are causing financial distress, you are not alone. One of the more common reasons people file for bankruptcy each year is because of rising medical debt. To get out from under medical debt, bankruptcy can be the key. Learn more about your choices when it comes to filing for bankruptcy because of medical debt.