Medical debt continues to be one of the top reasons why bankruptcy is filed. Yet, many debtors are unaware of how the filing process can help stop medical debt collections. Whether you’re facing a pending lawsuit for an outstanding balance, having wages or funds garnished from your account, need legal assistance in making affordable payments, or you just don’t have the funds to make regular payments, bankruptcy may provide the solution you need to stop collection attempts. If you qualify, you may be able to get your debt discharged or have a court-approved payment plan established to regain financial control.
So how can bankruptcy help deal with constant collection attempts from creditors for medical debt? When you file, the automatic stay goes into effect which helps stop collection attempts while providing property protection. This means creditors cannot continue to pursue you for payment, garnish wages or take funds from bank accounts. Chapter 7 bankruptcy and Chapter 13 bankruptcy both have automatic stay protection. The next step in your filing will depend on which chapter you file.
Chapter 7 bankruptcy can eliminate outstanding medical debt including related lawsuits. This chapter is often filed by debtors who have little or no assets. If you qualify you can have medical debt wiped out and discharged. This means you are no longer legally responsible for the debt and creditors will be notified of this ruling.
Chapter 13 bankruptcy restructures outstanding debt into an affordable repayment plan that can last anywhere from 3 to 5 years. If you qualify for this chapter you may be required to pay a portion of the medical debt, and then have the remaining amount discharged or eliminated at the end of the plan. As long you make payments the automatic stay will remain in effect until the case is completed.
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