Medical bills continue to be one of the main reasons why consumers seek bankruptcy protection. Anyone who has dealt with a long term illness, hospitalization, being underinsured or no medical coverage is aware of rising healthcare costs. Even a brief stay at the hospital has been known to create a financial burden on monthly living expenses. It is one thing to be overwhelmed in debt, but what if the debt is mostly medical related? Can bankruptcy be filed just to eliminate the medical debt?
You can file bankruptcy and include your medical debt, but when you file you must include all outstanding debt you owe. Debtors have been under the impression that a so called “medical bankruptcy” can be filed to eliminate medical debt. This type of bankruptcy does not exist. Chapter 7 bankruptcy allows for eligible medical debt to be discharged. Chapter 13 bankruptcy is a repayment plan that can help pay down outstanding debt.
The bankruptcy code is designed to treat debtors and creditors fairly. Most debts are classified as either unsecured or secured. This means if you have credit card debt, personal loans or other outstanding debt, you have to include them all in your filling since they are all treated the same. This can also be said for other debt obligations; if you have credit card debt you want to have eliminated, you can’t file with just the one or two accounts you want to have discharged.
What if you intend to incur more medical bills? Discuss options with your attorney. Depending on your situation, you may be recommended to wait to file your case once medical treatment has been completed. Remember, when you file medical debt that exists at the time of your filing it is eligible for discharge. This includes medical debt incurred before you filed your petition.
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