What is Medical Bills Bankruptcy?
As many as 50% of the bankruptcy cases filed in the United States are due to substantial medical debts. Clients often lack health insurance or have high deductibles, so the inability to cover health costs results in the need to file medical bankruptcy or medical bills bankruptcy.
If you have a significant amount of health-related bills that you cannot repay, such debts can be eliminated, or discharged, via medical bankruptcy. Such bills are categorized as “general unsecured debt,” which may be discharged in a Chapter 7 bankruptcy case.
When filing for medical bills bankruptcy, you must include all of your creditors in the case. Moreover, if you expect to incur additional bills, waiting to file your bankruptcy is ideal, as no medical expenses will be left following the closure of your bankruptcy case.
It is vital to have a significant amount of debt before you file a Chapter 7 medical bankruptcy case. A single person should have $15,000 to $20,000 in debt before considering Chapter 7 bankruptcy protection. This is because individuals are only eligible for Chapter 7 discharge every eight (8) years.
The Role of a Medical Bills Bankruptcy Attorney
Because a person may only discharge debt every eight (8) years, the discharge should not be exercised for an insignificant amount of debt. A medical bills bankruptcy attorney will usually counsel an individual client against filing a Chapter 7 bankruptcy if the debt is less than $15,000.
More specifically, these lawyers will point out that the discharge should be used sparingly, based on the client’s circumstances. Depending upon the client’s health and whether he/she possesses health insurance, waiting to see if they incur significant medical expenses in need of being discharged through bankruptcy at a later date may be ideal.
Medical Bankruptcy Due to a Provider Judgment
Many times clients are garnished for a past-due medical bill and simply cannot make an affordable payment arrangement with the healthcare provider. This common scenario results in the provider filing a judgment against an individual, forcing that person to file for bankruptcy to stop the garnishment and eliminate the judgment. If a healthcare provider has obtained a judgment against you for past-due bills, it is possible to legally discharge the judgment via medical bills bankruptcy.
If you lack health insurance, are in poor health and expect to incur substantial medical debts, consider waiting until after the health issue has been resolved before filing for bankruptcy. At the very least, wait until you know how future bills will be paid.