With medical insurance getting more expensive each year and procedures becoming more technically-advanced with new equipment and medicines, individuals can easily accumulate overwhelming medical debt very quickly. While studies may debate whether severe medical debt is directly causing an increase in U.S. bankruptcies, the fact remains that it’s often a correlating problem most filers experience. Because the bankruptcy process is structured to discharge or reorganize medical debts, it’s a viable option for those who can’t pay their medical bills. With the help of Behm Law Group, Ltd., you can recover from medical debt and successfully file for bankruptcy in Worthington, MN.
Medical debt can happen gradually as chronic treatments rack up bills or all at once if an unexpected medical emergency occurs. No matter the circumstances leading up to unmanageable medical debt, those debts are treated the same in bankruptcy cases. All your medical bills are considered to be unsecured nonpriority debts in your case. To put this in perspective, your credit card debts are categorized as unsecured nonpriority debts as well.
How your unsecured nonpriority debts are handled depends on the type of bankruptcy you file for.
Chapter 13 works to reorganize debts that aren’t exempt from the bankruptcy process into a new repayment plan. Secured debts are repaid in full along with select priority debts, but your unsecured debts—like the medical bills you owe—are often only partially repaid if they’re required to be repaid at all.
Chapter 7 works to liquidate your assets to repay your creditors in return for the discharge of most debts. This discharge includes your unsecured debts and allows immediate full relief from medical bills.
Limitations on Discharges
Relief from medical bills is guaranteed if you qualify for Chapter 7 bankruptcy by passing the Means Test. All your unsecured debts will be dissolved in return for major liquidation of your assets. In Chapter 13 bankruptcy, there are some limitations on the relief you can receive for your medical bills. Because your medical debt is lumped into one category with all your other unsecured nonpriority debts, they’re all subject to the same limitation. This limit manifests as a cap on the amount you can include in your repayment plan. Currently, you may file for Chapter 13 if you have under $394,725 in unsecured debts. This amount will change in April of 2019 to meet standards of income and overall economic adjustments, but for now, you can resolve all your debts in a new repayment plan if you meet this and other Chapter 13 requirements.
There may be some limits to the possibility of recovering from severe medical debt by filing for bankruptcy, but the majority of cases are highly effective in providing a solution for those struggling with hospital bills and more. For more information about filing for bankruptcy in Worthington, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.