Reorganizing Medical Debt Through Chapter 13 Bankruptcy
In comparison, Chapter 13 is a bit more complicated and takes longer. Known as a reorganization bankruptcy, Chapter 13 lets individuals consolidate their debt into a monthly payment plan that can last anywhere from three to five years. After your plan expires, any of your remaining debt is then charged.
Chapter 13 bankruptcy will only work if you have enough disposable income to keep up with your monthly payments. In contrast to Chapter 7, Chapter 13 may not completely wipe away your unsecured debt, although it should allow you to substantially reduce it.
Dealing With Medical Debt Through Filing Bankruptcy
Bankruptcy has several chapters. Some help businesses, others aim to help individuals. However, there is not a personal bankruptcy specifically for medical debt. Unlike priority debts such as tax obligations and student loans which are usually not discharged in bankruptcy, medical debt is categorized as unsecured debt. Unsecured debts include credit card debt, old utility bills, personal loans, and cash borrowed from friends and relatives. All these debts are treated the same way under the bankruptcy code. Consequently, if you file bankruptcy to have your medical debt discharged, your other unsecured debts will also be wiped out.
What Happens When I Have Outstanding Medical Debt
Outstanding medical debt will immediately go into collections. Once that happens, you can expect to receive phone call after phone call until the debt is paid. With the help of a collections attorney, the primary creditor can initiate several collections actions against you. These include:
- Placing liens on your property
- Garnishing your wages and
- Levying your bank account.
In other words, they can take their money by force, if necessary. To do this, they must first file a lawsuit and receive a judgment against you. The court will notify you that this action has been taken.
The bankruptcy process will prevent the creditor from garnishing your wages or taking other aggressive actions. In essence, the moment you file for bankruptcy, all creditor actions against you must stop immediately.
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If I Include My Doctors Bills In My Bankruptcy Will My Doctor Refuse To See Me In The Future
During the recent downturn in the American economy, the United States Bankruptcy Courts saw a record number of bankruptcy cases filed for several years in a row. Although the economy appears to be moving in a positive direction once again, millions of debtors are still feeling the impact of the recession. An individual may turn to bankruptcy for a variety of reasons however, one common cause is mounting medical bills. Whether your medical bills are the cause of your bankruptcy or are just a small portion of your overall debts, you may be concerned about how your doctor will respond if your medical bills are included in the bankruptcy. Specifically, many debtors ask If I include my doctors bills in my bankruptcy, will my doctor refuse to see me in the future?
Also, no hospital, emergency room, or ambulance service can ever refuse to treat you because you have an outstanding, unpaid, or discharged medical bill. Think about it for a minute. Have you ever been to an emergency room? Do you think everyone in that ER waiting room has paid all of his or her bills, including all of their medical bills? Emergency treatment is never refused in America due to unpaid medical bills.
If you have a medical issue and are considering a bankruptcy filing, please come see Erin B. Shank for a free consultation so that she can help you with these issues. She offers a free initial consultation and is here to help you through this difficult time.
Can I File Bankruptcy On Medical Bills Alone
Many consumers find themselves drowning in medical debt and wonder can bankruptcy be filed for medicals bills without including other debt such as credit cards and other accounts. You can file bankruptcy for your medical bills but it is unlikely youll be able to file without including other debts.
While bankruptcy may allow you to wipe away debt or restructure it with a payment plan, the process also allows for creditors to be treated fairly. Its one thing for you to choose who gets paid when you pay bills each month and you may feel some obligations more worthy than others, but in bankruptcy court it may not seem fair that you want to pick and choose certain debts and creditors when they are all entitled to receive payment.
Upon filing for bankruptcy, all unsecured debt would be listed. This includes medical bills, back taxes, credit card debt, personal loans and etc. Since the debts previously mentioned fall under the same category they would be treated fairly by the court.
Something else to consider when filing bankruptcy is which chapter to file. You may qualify to file one chapter over the other. If you are unable to make payments or dont earn enough to pay on what is owed, Chapter 7 may be the best option. Chapter 13 allows you to repay debt under a structured payment plan within a certain time period. Discuss with a bankruptcy attorney about meeting necessary qualifications for filing.
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Chapter 13 Bankruptcy Treats Medical Debt Differently
Medical debt is still regarded as an unsecured debt when filing for Chapter 13 bankruptcy. However, Chapter 13 regards unsecured debts differently than Chapter 7.
For medical bankruptcy under chapter 13, you must pay a percentage of your unsecured debts over the duration of your repayment plan.
The percentage you pay is based on your disposable income and the amount your unsecured creditors would have received if you had filed for Chapter 7 bankruptcy. When your repayment plan expires , the remainder of your medical debtand other outstanding unsecured debtsis discharged.
You aren’t alone. Get professional legal advice for medical bankruptcy and get a fresh start.
Contact Our Pennsylvania Bankruptcy Lawyers If You Have Significant Medical Bills
If you have an unforeseen healthcare emergency, your medical expenses could quickly become overwhelming. While medical bills are unsecured, a medical provider could file a lawsuit and obtain a judgment against your home or other property. Filing for bankruptcy is a way to avoid these drastic measures and address your debt. The knowledgeable Pennsylvania bankruptcy attorneys at Young, Marr & Associates are available to explain the pros and cons of filing for bankruptcy. If your medical debt or other financial obligations have gotten out of hand, call our law offices at 701-6519 to schedule a free appointment.
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Negotiating A Settlement Plan With Your Doctor
To start with this option, ensure you have settled all your insurance payments. After that, you can call your doctor to negotiate on how to settle your debt. Working directly with your creditors may open up better possibilities like a repayment plan that is interest-free. Additionally, if it is an uninsured medical bill, your doctor may waive a certain percentage of the cost. Several hospitals routinely discount or waive debts for patients that are not insured.
Bankruptcy For Medical Bills
You can file bankruptcy for medical bills. Not only will your medical bills be discharged by the bankruptcy, but your other existing unsecured debt will be discharged by filing bankruptcy as well. While this is sometimes referred to as a Medical Bankruptcy, there is no specific legal term for this. It simply signifies that the primary reason you are filing bankruptcy is due to your medical bills.
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The Reality Of Medical Debt
Medical debt problems can strike anyone: The problem cuts across age groups and educational levels. Even people who would be considered financially responsible can be affected by medical debt. More than half of Americans with medical debt have no other debts listed on their credit reports. Medical debt alone could make it harder for these individuals to buy houses or get a decent rate on a credit card.
- The average age of people who go through a medical bankruptcy is 44.9 years.
- Among people who experience a medical bankruptcy, 46.3% are married.
- Among people who experience a medical bankruptcy, 60.3% attended college.
- The average monthly household income of medical bankruptcy filers is $2,586/month.
- Among families who experience medical bankruptcy, 20.1% are military families.
- The average debt for households that experience medical bankruptcy is $44,622.
- About 19.5% of consumer credit reports include one or more medical collections.
- The average unpaid medical debt recorded on credit reports is $579.
- 22% of consumers with debts in collection have only medical debts.
- 54% of consumers with medical debt have no other debts listed on their credit reports.
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How To Eliminate Medical Bills With Bankruptcy In Florida
Unexpected medical bills can financially devastate a family for many years to come. The rising cost of health care is proving to be a tremendous burden on families. Most people file bankruptcy because of medical bills. A study by the American Journal of Medicine found that 62.1% of all bankruptcy cases are attributable to medical reasons. Further, the study found that 92% of the people filing bankruptcy for medical reasons had over $5,000 in medical bills.
Bankruptcy is used so often because it can wipe out all your medical bills. See Bankruptcy law 11 USC 524. This is because medical bills are almost always an unsecured debt. Unsecured debts are loans in which the borrower does not provide any collateral for the loan. Other examples of unsecured debts can include credit cards, student loans, rent, and gym memberships. When a debt is discharged in bankruptcy, the borrower will be released from personal liability on the debt. For more information about a specific bill or case, contact a Tampa bankruptcy law firm for advice.
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Basics Of Medical Bankruptcy
Medical bankruptcy is not an official term or bankruptcy category, but most people think of it as a way to discharge, or do away with, immense hospital and doctor bills.
Medical bankruptcy is not an official term or bankruptcy category, but most people think of it as a way to discharge, or do away with, immense hospital and doctor bills. It can also include the loss of time and income when you take off work to heal after an accident or illness. A lack of insurance coverage or overwhelming medical insurance premiums can add up quickly, especially for larger families.
When you file for bankruptcy, you cannot limit your case to medical bills alone. You are required to list all of your outstanding debts, including medical bills. From there, your debts fall into three different categories.
The first is secured debts, where the borrower puts up an asset as collateral for their loan. If the loan fails to be repaid according to the initial agreement, the borrower can sell their collateral to repay their debt. Otherwise, the bank can seize the asset, sell it, and pay back the debt. Mortgages and car loans make up two of the most common secured debts.
The next type is priority debts, which are often government or court-ordered obligations such as taxes, child support, and alimony.
The last type of debt is unsecured debt, consisting of medical care, old utility bills, credit cards, personal loans, and borrowed money from others.
Mail Your Financial Documents To Your Creditor
If youre filing for Chapter 7 or Chapter 13 bankruptcy, the court will appoint a trustee to you. The trustee oversees your case and sells any nonexempt property in order to pay back your creditors.
After your case is filed, the trustee assigned to you will send a letter asking you to send them financial documents. These can include recent bank statements, pay stubs, and tax returns. You must mail the documents promptly according to the specified instructions in the letter.
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Medical Debt In Bankruptcy
If you can’t settle the debt and it looks as if the creditor may pursue you for payment, then your good credit is going to take a hit anyway because a collection action will show up on your credit report. Also, if the provider sues you and gets a judgment, it can garnish your wages or take other collection action.
Not only can filing for bankruptcy wipe out your debt, but the sooner you file, the sooner you’ll be back on the road to financial recovery.
Does Chapter 7 Bankruptcy Clear Your Medical Debt
A Chapter 7 bankruptcy forgives debt without requiring the filer to pay any portion back to the creditor over time. You can file Chapter 7 bankruptcy when your income is low enough to pass a means test. Passing tells the court that you don’t have disposable income to pay your debts after paying your reasonable living expenses. Also, your property can only be sold to pay your creditors if it can’t be exempted, or protected from the claims of creditors. Most people can keep all or the majority of their property in a Chapter 7 case.
All of your medical debt can be wiped out in both a Chapter 7 bankruptcy and a Chapter 13. In a Chapter 7 bankruptcy, if you have a no-asset case , nothing will be paid on the medical debt. Even if some of your property gets sold, the funds will rarely be used to pay medical bills because higher priority debt, such as past-due support obligations and income tax, get paid first.
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Chapter 13 Bankruptcy And Medical Debt
Chapter 13 bankruptcy focuses on making debt repayment more manageable. After taking into account all of your debt, income and assets, a Chapter 13 bankruptcy establishes a court-mandated plan that helps you repay some or all of your debtincluding medical billsin affordable monthly installments that do not exceed 15% of your disposable income. Additional details:
- Chapter 13 creates a three- to five-year repayment plan. The plan is based on your debt and income levels. Some or all of your remaining debt may be discharged at the end of the repayment period, freeing you from further payments.
- Debt cannot exceed certain levels. To file for Chapter 13 bankruptcy, you must have no more than $394,725 in unsecured debt and no more than $1,184,200 in secured debt.
- You must have regular income. For Chapter 13 to work, you need the means to repay your loans, even at a reduced level.
- Chapter 13 may be better for homeowners. Chapter 13 halts the foreclosure process and requires your mortgage lender to let you include your home loan as part of your repayment plan.
- Resolution takes longer. While a Chapter 7 bankruptcy is over in four to six months after the proceedings end, Chapter 13 stretches out over years.
More Questions Call Our Kansas And Missouri Bankruptcy Law Firm
Medical costs imply there are also physical challenges in your life due to ongoing treatment or recovery. Wondering whether you will lose everything due to medical bills is unnecessary. Call us for a free financial consultation and let us answer your questions! If bankruptcy isnt a good option for you, we will tell you. But if filing bankruptcy can set you up for future financial success, well put our experience to work and help you begin to put all the financial stress and frustration behind you during this time in your life.
The Sader Law Firm helps clients from all over Kansas and Missouri find ideal solutions to their financial difficulties. Call us for a free phone consultation at 561 1818 or contact us online so we can get started.
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Is Bankruptcy The Best Option To Eliminate Your Medical Debt
Although the idea of getting rid of all your medical debt may be tempting, you need to consider carefully if filing for one is your best option at the moment.
Do you think youll most likely experience financial hardship in the future? If yes, then bankruptcy might not be a good solution. Take Chapter 7 bankruptcy for example. If you get a discharge, youll have to wait for eight years before you can get another. It means youll have to deal with all your debt if you face financial distress during that period.
If you dont have any property or only have income or assets that fall under exempted assets, creditors cannot garnish your wage or seize your belongings. You dont need to file for bankruptcy if thats the case.
If your financial hardship is temporary, check if you can wait out the statute of limitations in your state. Once it expires, creditors can no longer force you to pay the debt. However, if you choose this route, the outstanding debt will negatively affect your credit report.
Although You Must Repay Some Of Your Medical Debts In Chapter 13 Bankruptcy You Do This Through The Protection Of Your Chapter 13 Repayment Plan
High medical debt is cited by many as the primary reason for filing for Chapter 13 bankruptcy. Although you must repay some of your medical debts in Chapter 13 bankruptcy, you do this through the protection of your Chapter 13 repayment plan. Most people with large medical debts who file for Chapter 13 bankruptcy end up paying only a portion of their medical debts through their repayment plan the rest are discharged at the end of the plan period.
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Can You Include Medical Bills When Filing Bankruptcy In Michigan
Between the health crisis due to the coronavirus pandemic and the number of people who have lost their jobs in 2020, medical bills are likely adding to the financial difficulties that families may have already been experiencing.
Although the state of Michigan and federal agencies are assisting families who may have been impacted medically or financially by COVID-19 in numerous ways, steep medical bills may still be compounding the problem.
In light of these two factors combined, many people may be wondering if you can include medical bills when filing bankruptcy in Michigan.
Bankruptcy might be the answer to resolve both issues at the same time, so schedule a consultation with one of our bankruptcy attorneys in Brownstown Township to see if this is the route for you.
In the meantime, here are a few basic facts you may wish to know about the relationship between bankruptcy and medical bills.