Medical Debt and Bankruptcy
Two types of consumer bankruptcy can help you eliminate or discharge most of the medical debts you have. Essentially, medical bills are considered unsecured debt, which Chapter 7 can help get rid of and all other unsecured debt, including credit cards. Chapter 13 is more like reorganizing your debt, and by the time you are done, you will have paid some remaining balance, while the rest may get discharged. Those with a higher income seeking bankruptcy may need to file for Chapter 13.
Bankruptcy attorneys in Brooklyn NY, can help you determine which bankruptcy option is best for you and help you get rid of your medical debt.
Secured vs. Unsecured Debts
It is vital to know the difference between secured and unsecured debt when filing bankruptcy. Secured debt is any debt where collateral was used to secure the debt, such as a home loan or car loan. This means if the person is unable to pay the required loan payments, the creditor can seize the property in an attempt to get their money back.
Unsecured debt is a debt that does not have collateral behind it. These debts are typically associated with buying something or paying for a service using an unsecured payment method. For example, unsecured debt includes medical bills, credit card debt, utility bills, or other types of debt without collateral attached to it.
A bankruptcy lawyer Brooklyn can help you determine which debt is secured and unsecured.
Can you claim medical debt in bankruptcy?
Since medical debt is considered unsecured debt, it is possible to claim it in your bankruptcy. How much you make and how much debt you have may determine which type of bankruptcy you file for – Chapter 7 or Chapter 13.
Does it fall under Chapter 7 or Chapter 13?
Medical debt falls under Chapter 7 and will discharge all of it. There is no dollar limit as to how much debt relief you can get for your medical costs and medical care, including payments made to medical professionals made on credit cards. There is no repayment plan to pay back any of these debts when filing Chapter 7.
Chapter 13 is a little different from Chapter 7, as it will discharge your medical debt by lumping all of your bills together, and a repayment plan is set for you. Your monthly payments are based on your income minus expenses. Repayment plans last three to five years, after that, any remaining medical debt is discharged, and you no longer have to pay the remaining balance. However, Chapter 13 does have limits, which change every few years. Currently, unsecured debt limits for Chapter 13 are $419,275, which includes medical debt and credit card debt.
Bankruptcy attorneys Brooklyn can help you determine if your medical debt falls under Chapter 7 or Chapter 13.
What are the requirements, and what do you need to do for both?
To file Chapter 7, you must pass the Means test to qualify. This test looks at the average income in the state you are filing in, minus any necessary expenses. If your income falls below the state’s median income, you qualify to file for Chapter 7. Those who do not have enough disposable income to cover certain expenses can also file for Chapter 7 to discharge medical debt. A bankruptcy attorney Brooklyn can help determine if you meet the requirements to file for bankruptcy.
How your attorney can help walk you through the process
Brooklyn bankruptcy lawyers can help those with excessive medical debt determine if they qualify to file bankruptcy and which one they should file. Your attorney will walk you through the process, help you fill out all necessary forms, and file your bankruptcy with the courts. Additionally, the attorney helps answer any questions you may have throughout the process and appears in court with you. The attorney also communicates with the trustee for those who file Chapter 13.
If you struggle to get out from under your medical debt, you could file for bankruptcy with a Brooklyn bankruptcy lawyer. Call the Ursulova Law Offices today to schedule an appointment for your bankruptcy consultation.
