With the drastic increase in medical care expenses, many people often find themselves in serious financial trouble. One way to possibly get out of massive medical debt is through bankruptcy. If you think you may file for bankruptcy to get out of medical debt, the following information may be helpful:
Should You File Chapter 7 or Chapter 13?
There is no specialized bankruptcy for medical debt. You can opt for either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is a more straightforward debt discharge process that gets rid of most of your debt, which can include your medical bills. Not all debt can be discharged under Chapter 7. Alimony back payments, student loans, and child support payments are some examples of debt that cannot be discharged under Chapter 7.
Chapter 13 bankruptcy is a debt restructuring program. The process reorganizes your debt and makes the payments more manageable easier to pay over a longer timeframe.
The question then becomes which option should you choose for your medical debt. Chapter 7 seems more ideal because it essentially erases your debts. For example, if you want to keep a home, vehicle, boat, or other asset tied to your debt, you can opt to keep the asset out of bankruptcy through an exemption.
However, you need to know about certain restrictions. You must have certain income and expenses to qualify for Chapter 7. Under Chapter 13, your medical debt is not discharged, but you can make your payments more easily, allowing you to have more disposable income to dedicate elsewhere.
You and your attorney will need to determine which bankruptcy option is best for you.
Can You Still Receive Medical Care?
When it comes to medical debt, one issue is your medical provider. You are not tied to a tangible asset, but you are tied to your medical provider. If you owe a lot of money to a provider that you cannot pay, it can be problematic. The nature of your medical debt has an impact on your provider/patient relationship. For example, if you owe debt directly to a medical facility or hospital, you cannot be denied service and can still get treatment under the law.
When you owe money to a practice or directly to a medical provider, they may opt to no longer see you as a patient. The decision will vary from practice to practice. You might have a very good relationship with your doctor who is more understanding or willing to work with you despite your bankruptcy. Ultimately, be prepared to change medical providers once you start the bankruptcy process.
Contact a local bankruptcy attorney to learn more.