Medical Bankruptcy Options
Facing financial instability due to mounting medical bills can be an overwhelming experience. However, individuals do have options to get out of such predicaments, and one of these solutions is medical bankruptcy. Understand the concept of medical bankruptcy in this article, especially in the New York jurisdiction, to help you make an educated decision.
What Is Medical Bankruptcy?
Medical bankruptcy is a type of bankruptcy filed primarily to eliminate or reduce overwhelming medical debts. Contrary to common perception, there is no distinct “medical bankruptcy” category under U.S. bankruptcy law. Rather, medical debts are often discharged through either Chapter 7 or Chapter 13 bankruptcy filings, depending on various factors like income and asset evaluations.
What Type of Debt Is Medical Debt?
Medical debt falls under the category of unsecured debt, which means that it is not linked to any form of collateral such as property or assets. In simple terms, a lender cannot claim specific assets if you fail to pay off your medical bills, unlike secured debts like a mortgage or auto loan. However, this does not mean that the repercussions of unpaid medical debt are inconsequential; it can still severely impact your credit score and make future financial endeavors challenging.
Courts generally view medical debt as “involuntary” since health crises are typically unforeseen and unavoidable, as opposed to debts incurred through spending choices. Because of this distinction, some state laws, including New York, have specific provisions that may offer more lenient repayment terms for medical debts during bankruptcy proceedings. Nevertheless, the basic premise remains that medical debt is eligible for discharge in bankruptcy, similar to other types of unsecured debts like credit card balances or personal loans.
How Does Medical Bankruptcy Work in New York?
In New York, the procedure for filing bankruptcy due to medical debt is similar to other states but with specific nuances. Firstly, New York has its own set of exemptions that may protect your property during bankruptcy. The New York State homestead exemption, for example, allows an individual to protect up to a certain value of his or her home. Secondly, income thresholds for Chapter 7 bankruptcy differ in New York, which is why it’s crucial to consult with a bankruptcy lawyer in Brighton Beach to navigate the specifics.
Filing for medical bankruptcy in New York also necessitates completing a means test, which will determine your eligibility for Chapter 7 or direct you toward Chapter 13. As soon as you file for bankruptcy, an “automatic stay” is activated. This legal provision temporarily stops most creditors, including medical debt collectors, from pursuing payments or initiating lawsuits against you. This stay provides critical breathing room, allowing you to focus on organizing your finances and working with a bankruptcy lawyer in Brighton Beach to chart the best path forward.
Talk to a Bankruptcy Lawyer in Brighton Beach
Medical bankruptcy is a viable option for those grappling with insurmountable medical debts. By understanding the nature of medical debt and the specifics of bankruptcy laws in New York, you can make a well-informed decision tailored to your financial needs. Ursulova Law Offices’ leading Brighton Beach bankruptcy lawyer is committed to offering legal advice and personalized solutions for your medical bankruptcy concerns. Contact us today for a consultation to explore the best course of action for your situation.
