Should I Delay Bankruptcy If I Will Be Incurring New Debt
Since you would only be able to discharge debts that have been included in your bankruptcy petition, it may be in your best interest to delay your filing if you know that you will be incurring new medical debt in the near future. This will help you to ensure that you are not saddled with additional debt after completing the bankruptcy process.
If you are unable to hold off any longer, for whatever reason, it is important to note that you have the option tofile for bankruptcy a second time if necessary. Depending on the chapter that you file under, however, you may be required to wait anywhere from 2 to 8 years before you can file again. That being said, you should not hesitate to weigh your options before filing.
Discharging Debt With Medical Bankruptcy In Indiana
Here in Indiana, theres no legal definition of medical bankruptcy. In fact, its not even a term thats defined in the U.S. Bankruptcy Code.
Medical bankruptcy is a smart way of using personal bankruptcy to target medical bills. Generally speaking, you can use either Chapter 7 or Chapter 13 bankruptcy to accomplish the goal of erasing medical debt.
Most medical debt is eligible for discharge in bankruptcy because its unsecured debt debt thats not secured by something tangible like a vehicle or house. The bankruptcy court will work with you and your lawyer to establish the scope of your debts, determine which can be discharged, and essentially force your medical providers to accept a resolution.
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.
The Indirect Route To Losing Your Home To Medical Debt
Even if theres no medical lien on your property, you could still lose your home to unpaid hospital bills and medical debt due to the domino effectwhen one event sets off a chain of similar events. In theory, you could lose your home to any unpaid bills.
Paying off medical debt while still trying to maintain your lifestyle can lead to maxed out credit cards, missed utility payments, and even getting behind on your mortgage. Keeping up with the financial demands of homeownership becomes a burden.
The roof starts to leak and repairs need to be made, but theres no money to make them. You could dive deeper into debt trying to stay on top of everything, or you could sell your house to pay off debt and take the first step towards a healthier financial future.
Thats exactly what one HomeGo homeowner did. He sold his rental properties before they fell into disrepair and he was saddled with an overwhelming about of medical debt and home maintenance costs.
My health had taken a really bad turn for the worse. I lost my kidneys and my bladder. We actually had two other homes as well. I sold all of them because I just didnt have the wherewithal to continue to take care of my own properties. My health went really quickly, and I didnt know if I was going to recover or not. I didnt feel like I could leave my wife saddled with the rent houses.
A Path To Debt Relief
Filing Chapter 13 can help you with medical debt by allowing you to set up a three- to five-year debt repayment plan. Monthly payments in the plan are based on whats determined to be affordable for you, but all disposable income has to go toward your debts during the repayment period.
If you fail to follow your plan or to meet other financial obligations, like filing taxes or paying child support, you could once again be in jeopardy of losing your assets. But if you complete your plan as agreed, your remaining debt can be discharged at the end of the repayment term.
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The Method Of Bankruptcy Best For Your Struggles With Medical Debt
Your bankruptcy attorney will review your circumstances with you, including your income, assets, and liabilities, and let you know which method of filing is best for your situation. In some cases, the attorney might file a Chapter 13, but if the Means Test dictates that you do not qualify, you can convert Chapter 13 to Chapter 7.
Use Bankruptcy Courts To Process Other Existing And Future Medical Debt
The so-called Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was a disastrous piece of legislation that benefited Wall Street and the credit card companies while causing severe economic pain and financial distress for ordinary Americans throughout the country.;A study of its impacts found that the bankruptcy bill made it harder for patients to discharge medical debt through bankruptcy after a hospital stay, especially for uninsured patients. And, during the debate, then-Senator Joe Biden was one of only three Democrats to vote against an amendment that would have exempted those with serious medical debt from the draconian means test.;
The bankruptcy bill reinforced and strengthened a rigged financial system that disproportionately harms African American borrowers and makes debt relief and forgiveness harder to obtain. Not only must we eliminate past-due medical debt, we must also reform our corrupt bankruptcy system to make it easier to discharge medical bills put on credit cards and other forms of payment, and ensure this debt does not follow patients going forward.;
As president, Bernie will:;
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Does Medical Debt Go Away After Seven Years
If youve ever been in a situation where you didnt have health insurance or were under-insured, you may be faced with some medical debt. Two-thirds of Americans state that they are very worried or somewhat worried about being able to afford unexpected medical bills for themselves or their family.;A surprise medical bill can be an extremely stressful occurrence, especially if youre already facing debt.
Use Bankruptcy To Eliminate Your Medical Debt
Millions of Americans face unexpected medical costs. Even with insurance, such costs can leave people with substantial debt. According to the Sycamore Institute, a public policy research institute in Tennessee, over one in five Tennesseans had medical debt on their credit report in 2018, before COVID.
Many people delay lifesaving medical treatment or face stark choices between paying for medical care or putting that money toward food or rent. Others endure wage garnishment or harassment from debt collectors. No one should have to risk their health or lose everything over medical costs.
Bankruptcy courts offer protection to people who cannot pay their debts. It can allow debtors some relief from debt and a chance to get their finances under control.
Bankruptcy has long-term consequences for your credit score. If you are considering bankruptcy, understand the benefits and costs before starting the process.
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Aug Can I File A Bankruptcy Only On My Medical Bills
Just the other day I was asked can I file a medical bankruptcy? The answer is no. There is no such thing. You can file bankruptcy on your medical bills. However your bankruptcy must include every bill and everyone that you owe. You can not just file on the medical bills. Generally the medical bills will be discharged and will go away.
Medical bills are often cited as one of the prime reason people end up filing bankruptcy.
Bankruptcy law requires that all of your bills and all of your creditors are listed.If you do not list all of your bills you may have problems with your bankruptcy. The failure to disclose assets or debts can prevent you from receiving your discharge.
The worst part about leaving out a bill is that you may still owe it after your bankruptcy. Now you have filed bankruptcy without getting all of the relief you deserve.
Medical Debt A Leading Factor In Bankruptcy Filings
According to the American Journal of Medicine, in 2007 62% of people filing for bankruptcy cited medical debt or a loss of income due to illness as a leading reason for their decision to file for bankruptcy. Since that time, the trend has continued; a large percentage of bankruptcy filers turn to bankruptcy because of high medical debts.
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Chapter 7 And Medical Debt
If you don’t earn much money and have assets with little or no equity, then a Chapter 7 bankruptcy might be a good choice for you. You don’t have to have a certain number of debts. You can file for Chapter 7 on a single, but substantial, debt. Medical debt, like most other unsecured debt , will be wiped out in Chapter 7 bankruptcy.
Is Medical Debt Ever Forgiven
Unfortunately, medical debt does not simply go away completely after seven years. Under the Fair Credit Reporting Act, most accounts that go to collections only stay on your credit report for seven years, After that, they no longer affect your credit score. Medical debt will be removed from your credit report after seven years, so they will not be held against you if you apply for a loan, an apartment, etc., however, you are still legally responsible for paying them.
It is important to understand that you are not alone if you have incurred an unmanageable amount of medical debt. While filing for bankruptcy may be the most practical course of action, our firm welcomes the opportunity discuss your options. Contact our Chicago bankruptcy attorney today for more information!
Attorney Joseph P. Doyle is well-equipped to assist you with bills from:
- Other medical care providers
Contact us online or call to set up a consultation with a medical debt attorney in Chicago.
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Coronavirus And Medical Debt
Congress has passed some legislation that might help with upfront costs.
Congress also has mandated that all coronavirus testing be covered in full by group health plans or health insurance issuers.
The Coronavirus Aid, Relief and Economic Security Act, or CARES Act, also provides some money to healthcare providers to treat uninsured patients for coronavirus. Its not yet clear exactly how this will work for individuals. Credit Karma will update this section as more information becomes available.
You can find more information on government resources here.
Complete The Bankruptcy Forms
There are at least 23 separate forms that add up to around 70 pages that you need to fill out. You will be required to list all of your real estate, debts, and personal property. You will also need to provide every detail of your financial life, such as your last debt payments, family income, every family expense, and your latest property sales or transfers.
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Make Sure That The Debt Is Actually Yours
Itâs important to make sure that the debt in question is actually yours. Under the FDCPA, you have the right to dispute the debt by demanding a verification letter. A verification letter is like a validation letter, but it provides more specific information about the debt.
A common reason for disputed debt is – quite simply – mistakes. For example, the medical billing department or the collector may have made a mistake in their records. Entering the wrong code or using the wrong Social Security number alone could saddle you with debt that isnât yours.
Errors may also occur if your insurer doesnât process your insurance claim appropriately. Even your medical provider may have made a mistake in their notes about the medical services they provided, which would lead to inaccurate medical costs. If you have any questions about how your health insurance company or your service provider has billed you, contact them right away.
Once youâve disputed the debt, the debt collector cannot contact you again until theyâve sent you a new verification letter.
Is Medical Debt Discharged In Chapter 13 Bankruptcy
WhileChapter 13 bankruptcy will not eliminate your unsecured debt as quickly as Chapter 7, it is still a viable option for those who are unable to get out from under their medical debt. Rather than receiving a discharge of debt within 4 to 6 months of filing, as would be the case in Chapter 7, Chapter 13 would allow you to develop a repayment plan that could be executed over 3 to 5 years. As long as you follow the decided guidelines of your bankruptcy plan, you should be able to receive a discharge of all remaining debts once the process has been concluded.
Unlike Chapter 7, which requires debtors to pass ameans test, Chapter 13 bankruptcy is available to all consumers who have run into financial trouble.
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Are There Other Options To Repay Medical Debts
If the only debts that you are struggling to pay are medical debts, there could be other options for debt relief. For example, a debt relief company or you could try settling medical debt and getting on a repayment plan with your creditors that is affordable for your income and expenses. You may also be able to negotiate a one-time lump sum payment to satisfy the debt that is lower than the amount you owe. There are also debt consolidation options and other options for repaying medical bills other than filing a Chapter 7 or Chapter 13 bankruptcy case.
Use Caution When Shopping For Debt Relief Services
Avoid any debt relief organization whether its credit counseling, debt settlement, or any other service that:
- charges any fees before it settles your debts or enters you into a DMP plan
- pressures you to make “voluntary contributions,” which is really another name for fees
- touts a “new government program” to bail out personal credit card debt
- guarantees it can make your unsecured debt go away
- tells you to stop communicating with your creditors, but doesnt explain the serious consequences
- tells you it can stop all debt collection calls and lawsuits
- guarantees that your unsecured debts can be paid off for pennies on the dollar
- wont send you free information about the services it provides without requiring you to provide personal financial information, like your credit card account numbers, and balances
- tries to enroll you in a debt relief program without reviewing your financial situation with you
- offers to enroll you in a DMP without teaching you budgeting and money management skills
- demands that you make payments into a DMP before your creditors have accepted you into the program
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How Do You Get Medical Debt Forgiven
You can contact the medical provider and ask if it has any programs available to help you pay your debt. You can also settle with the medical provider by making payment arrangements. However, the medical debt will most likely show up on your credit report. You can ask if they will remove any negative credit reporting and give you a Paid on time rating when you have finished paying the bill.
If your medical bills are astronomical, you could consider filing bankruptcy to discharge the debt. This option will not only have negative credit ratings from the medical provider, but it will also have a negative rating for having a bankruptcy.
Contact Our Chicago Bankruptcy Lawyer
At Joseph P. Doyle, we truly understand how stressful it can be to suffer from debt. Not only does it place strain on your day-to-day life, but it may even prohibit you from planning for the future. Fortunately, relief is a possibility when you take measures to regain control of your finances. With the help of a Chicago bankruptcy attorney from our firm, you can get started immediately.
All you have to do is at to take advantage of a free initial consultation.
Medical Bill Relief Under Chapter 13 Bankruptcy
A chapter 13 bankruptcy is less common compared to chapter 7. However, it is still a common form of bankruptcy in California that can help pay your medical debts. This type of bankruptcy is also called reorganization bankruptcy.
Chapter 13 bankruptcy is quite different from bankruptcy under chapter 7. In this chapter, in case the bankruptcy filing is successful, none of your property will risk liquidation. However, you have to create a repayment plan that will last over time. The plan will require you to make recurring payments using your disposable income over a timeframe of three to five years, hence the name reorganization bankruptcy.
If you adhere to the terms of your repayment plan and meet all other requirements, the court will discharge your debts, just like in chapter 7. The discharge should erase the outstanding dischargeable debts after your repayment plan period elapses. Like in chapter 7, medical bills are also dischargeable in this chapter. This means that the moment you complete your repayment plan, your remaining medical bill can be wiped out.