When a serious personal injury accident causes someone to accumulate thousands of dollars in medical bills, they may not know how they are going to pay these expenses off. With other costs such as rent, groceries, utilities, and more, adding an expensive hospital bill may be too much to handle. Eventually, a person may wonder whether filing for bankruptcy can help them get their medical bills discharged. Medical debt is one of the most common reasons why people seek financial relief through bankruptcy. The best way to learn whether this choice will be in your best interest long-term, is to consult with a lawyer in your town.
Priority and Nonpriority Unsecured Debts
When preparing to file for bankruptcy, a lawyer can help you separate debts into two categories: nonpriority and priority unsecured debt. Debts including obligations for domestic support and unpaid taxes get special priority treatment, meaning that bankruptcy won’t eliminate them. So, if the debtor has money available to them, then they must first spend it on these debts.
Medical bills are categorized as unsecured general debts, so just like credit card debt, they don’t get priority. A person may be able to get them erased by filing under a bankruptcy chapter. Your lawyer can advise which chapter to file for depending on your financial situation.
Chapter 7 and Chapter 13 Bankruptcy
Medical debs can be discharged if you file for Chapter 13 or Chapter 7 bankruptcy. Which you apply for will be based on if you meet certain criteria and what makes the most sense for your financial future. The goal of bankruptcy is to help get you out of a serious rut, not to create a new set of problems.
Under Chapter 13 bankruptcy, medical bills are added together with any other unsecured general debts in the repayment plan. How much you pay depends on income, nonexempt assets, and expenses. Every creditor you owe money to will receive a pro-rata portion of the total. Chapter 13 usually entails a repayment plan over the course of 3-5 years. After you have finished, the remaining amount of your debts may be discharged.
Under Chapter 7 bankruptcy, your medical bills will be discharged. There isn’t a limit to how much medical debt can be eliminated under this chapter. Medical bills that you have already paid using a credit card will likely also be eradicated.
Getting Help From a Lawyer
Lawyers who are familiar with bankruptcy law can understand the amount of pressure that a person may feel every single day that they remain in debt to a medical facility. If you encountered this debt due to a personal injury accident, it’s increasingly important to consult with a bankruptcy lawyer in Clearwater, FL. You may be entitled to financial compensation from the at-fault party instead of filing for bankruptcy. It’s imperative to understand your options and get legal advice before making any big decisions that will impact your life for many years to come.
Thanks to The Law Office of Michael A. Ziegler, P.L. for their insight into bankruptcy law and medical bills.