Medical Debt and Bankruptcy

Many Americans will face a medical emergency in their lifetime, and they will have to find a way to pay the bill. But it’s not just sudden medical emergencies that lead to expensive treatments and high bills. A serious respiratory illness, a gastrointestinal problem, and nerve damage are just a few examples of long-term medical issues that leave patients with mountains of medical debt.

When insurance doesn’t provide enough coverage, you may have to use a credit card or take out a loan to cover your medical bills. Over time, that debt will increase and your financial situation may change so that it becomes impossible to pay it back.

If you are in this situation, you may want to consider filing for bankruptcy for medical debt relief. An experienced bankruptcy attorney can guide you through the process so that you know exactly what to expect. Our team at Vivona Pandurangi, PLC focuses on making legal help more accessible to all and securing the results you need. We serve clients in Falls Church, Virginia, as well as Alexandria, Arlington, Fairfax, Manassas, and throughout the nearby counties.

Will Bankruptcy Discharge Medical Debt?

It is possible to discharge medical debt through bankruptcy. Medical debt is considered “unsecured” – meaning that there is no collateral for it. If you have paid for healthcare expenses with your credit card, then that is considered unsecured medical debt.

It is important to know that you cannot discharge just one type of debt. For example, you cannot eliminate only your medical debt or only your credit card debt.

When you file for bankruptcy, you are filing for relief for all your debt types. Filing for bankruptcy stops harassment from most creditors almost immediately.

What Chapters Can Help with Medical Debt?

Two bankruptcy chapters can help by either eliminating or reducing your medical debt. These are Chapter 7 bankruptcy and Chapter 13 bankruptcy.

It is important to be aware of how filing for bankruptcy can affect your credit score and other financial issues – and how it can help you start fresh in your financial life.

Filing Chapter 7 Bankruptcy for Medical Debt

To file for Chapter 7 bankruptcy, you must pass the Chapter 7 Means Test, which compares your income with the median income in your state while also considering your necessary expenses.

With Chapter 7 bankruptcy, most of your total debt will be discharged, meaning that you will not be responsible for that debt any longer. All of your medical debt will be discharged. There’s also no limit on how much debt you can have to file.

Lastly, when you file for Chapter 7 bankruptcy, you don’t have to agree to a repayment plan for your medical debts. About 90 to 120 days after you file for Chapter 7 bankruptcy, your debts will be discharged.

Filing Chapter 13 Bankruptcy for Medical Debt

The second type of bankruptcy that you can file for medical debt is Chapter 13 bankruptcy. Chapter 13 bankruptcy helps you repay your debts without losing your property.

Essentially, Chapter 13 bankruptcy gives you more time to negotiate with creditors and repay. You’ll have more time to make payments and you’ll be allowed to keep the property that you’re making payments on.

Just as with Chapter 7 bankruptcy, you must meet certain requirements to file for Chapter 13 bankruptcy. You must be able to repay a certain percentage of your debt to your creditors. That percentage is determined by your state.

With a Chapter 13 bankruptcy, you are agreeing to a repayment plan. The amount of medical debt that you have to repay will most likely be a small percentage compared to your total original medical debt.

How an Experienced Bankruptcy Attorney Can Help

A medical emergency or a long-term medical issue can create expensive medical debt. Let’s discuss whether bankruptcy is right for you, and if so, which type you should file for. Our team at Vivona Pandurangi, PLC is committed to helping our clients find medical debt relief. We serve clients in Falls Church, Virginia, as well as Alexandria, Arlington, Fairfax, Manassas, and throughout the nearby counties. Contact us today to schedule a free consultation.