Medical Debt Bankruptcy Help

For many individuals, the burden of medical debt can be overwhelming, leading to the consideration of bankruptcy as a viable solution.

Medical debt bankruptcy is a legal process designed to help individuals overcome insurmountable medical bills. In New York, this form of bankruptcy offers a pathway to financial stability for those burdened by excessive healthcare costs.

At Ursulova Law Offices, our bankruptcy lawyer in Brighton Beach recognizes the unique challenges posed by medical bankruptcy and provides tailored solutions to those considering medical debt bankruptcy in New York.

Eligibility for Medical Debt Bankruptcy

Eligibility for medical debt bankruptcy varies based on several factors, including income, the amount of debt, and other financial obligations. In general, individuals with overwhelming medical bills and insufficient income to cover these debts may qualify.

Unlike secured debts, such as a mortgage or a car loan where the loan is backed by a physical asset, unsecured debts like medical bills do not involve any property that creditors can claim if the bill goes unpaid. This makes medical bills a form of unsecured debt, relying solely on the debtor’s promise to pay.

In bankruptcy proceedings, unsecured debts like medical bills are often among those that can be discharged, relieving the debtor of the obligation to repay them under certain conditions.

Discharging Medical Bills Through Bankruptcy

Medical bills can be discharged. Both Chapter 7 and Chapter 13 bankruptcy can lead to the elimination of medical debts.

Chapter 7 Bankruptcy

Often referred to as ‘liquidation’ bankruptcy, Chapter 7 allows individuals to discharge most, if not all, of their unsecured debts, which typically includes medical bills. This process involves a thorough assessment of the debtor’s assets and income.

Assets that are considered non-exempt may be liquidated by a bankruptcy trustee to pay off creditors. However, in many cases, debtors do not lose any assets due to exemptions.

Chapter 13 Bankruptcy

This chapter is often referred to as the ‘wage earner’s’ bankruptcy due to its structure. Chapter 13 is particularly suited for individuals who have a regular income but still find their medical debts unmanageable. Under Chapter 13, a significant portion of the medical debt can be restructured or reduced.

In this process, the debtor works with their Brighton Beach bankruptcy lawyer to devise a repayment plan that lasts between 3 – 5 years. This plan is tailored to their income level and allows them to make manageable payments towards their debts.

Impact of Bankruptcy on Medical Debt and Credit Score

Filing for bankruptcy in New York to manage medical debt can significantly impact an individual’s financial situation, including their credit score.

Filing for bankruptcy has a significant negative impact on an individual’s credit score. A bankruptcy filing can remain on a credit report for up to 10 years for Chapter 7 and up to 7 years for Chapter 13.

This can lead to challenges in securing loans, credit cards, and might affect interest rates and credit terms. However, for many, the impact on the credit score is offset by the relief from insurmountable debt.

It is important to note that the decision to file for bankruptcy due to medical debt should be made after careful consideration and, ideally, consultation with a bankruptcy lawyer. While it can provide a fresh start from overwhelming medical bills, the long-term implications on credit and personal finance need a thorough evaluation.

Know Your Best Option, Consult a Bankruptcy Lawyer

Dealing with medical debt can be a daunting experience, but understanding the available legal options can bring much-needed relief. Ursulova Law Offices, with our comprehensive understanding of medical debt bankruptcy, stands ready to guide you through this challenging time. Contact us today for a consultation with our Brighton Beach bankruptcy lawyer, and embark on your journey toward financial recovery.