Medical debts are one of the most common reasons that people need to seek bankruptcy relief. With out of control medical costs and increased insurance premiums more and more people are forced into financial ruin with just a day or two stay in hospital. With passage of the Affordable Heath Care Act it was assumed that the number of people forced into bankruptcy due to medical debts would decrease – in my practice I have not seen that be the case.
In a bankruptcy your debts are put into different categories. There are some debts that can’t be eliminated through bankruptcy and have first priority, however, medical debts are not one of them. Bankruptcy for medical debt: In a bankruptcy, medical bills are considered general unsecured debts. Since they don’t have priority treatment and can be wiped out just like how most credit card or other unsecured debts can be wiped out. In a Chapter 7 bankruptcy case it is important to note that there is no limit to the amount of medical debt that you need to have to file for bankruptcy and there is no limit on the amount of medical debts that can dismissed in a bankruptcy. Sometimes people have so much medical debt in a bankruptcy that the case is called a medical bankruptcy. Its not uncommon for people who have accrued large amounts of medical debts have used credit cards to pay for them which accumulates a massive amount of debt. People who file for a Chapter 13 bankruptcy to dismiss medical debt usually don’t end up paying back all of it, they pay until certain court set period is up and then the rest of the debts are dismissed or discharges.
If you are being overwhelmed by medical debts then bankruptcy for medical debt it is a good idea to speak with a bankruptcy lawyer. Sometimes you need to determine if bankruptcy will help your situation and an experienced attorney can help you look at all your debts and make some informed decisions.