Using Bankruptcy to Stop Medical Debt Collections

April 2nd, 2013 by Reed Allmand

Medical bill

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.

Reference: http://www.nolo.com/legal-encyclopedia/will-bankruptcy-stop-medical-debt-collections.html

avatar

About Reed Allmand

Website

Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

View all posts by Reed Allmand

Subscribe

Subscribe to our e-mail newsletter to receive updates.

FAQ

Why do I need to submit a new wage order when I modify my plan

When we modify your bankruptcy plan we are changing your plan payments. This means that we have to get with your employer and change the terms and amount of your wage order. The only way we can do that is by filling out a new wage order form.  

Learn More
What happens if the stay terminates on my home?

If the bankruptcy stay terminates on your home that means that even though your in bankruptcy, your creditor can pursue all there legal remedies they can pursue if you were not in bankruptcy. This includes foreclosure, and having your house sold and evicting you from your house.

Learn More

Find Location

map
  • Dallas Bankruptcy

    5646 Milton Street, Ste. 120 Dallas, Texas 75206
  • Fort Worth Bankruptcy

    860 Airport Freeway, Suite 401, Hurst, Texas 76054
  • More Locations

Meet Our Clients