Discharging Medical Debt
Chicago Bankruptcy Attorney
According to a study published in the August 2009 issue of The American Journal of Medicine, medical debt is the leading cause of personal bankruptcy filings in the U.S. In fact, it was discovered that 62% of the study's participants attributed their bankruptcy to medical debt and/or financial losses sustained from an illness. Not surprisingly, this trend is expected to carry on throughout the years.
Is Medical Debt Ever Forgiven?
Unfortunately, medical debt does not simply go away completely after seven years. Under the Fair Credit Reporting Act, most accounts that go to collections only stay on your credit report for seven years, After that, they no longer affect your credit score. Medical debt will be removed from your credit report after seven years, so they will not be held against you if you apply for a loan, an apartment, etc., however, you are still legally responsible for paying them.
It is important to understand that you are not alone if you have incurred an unmanageable amount of medical debt. While filing for bankruptcy may be the most practical course of action, our firm welcomes the opportunity discuss your options. Contact our Chicago bankruptcy attorney today for more information!
Attorney Joseph P. Doyle is well-equipped to assist you with bills from:
- Other medical care providers
Medical Debt & Chapter 7
If you are suffering from a substantial amount of medical debt, most legal experts would advise that you file for bankruptcy under Chapter 7. Since this process would allow you to discharge most, if not all, of your medical debts over a short period of time, it would subsequently free you of the legal obligation to repay it. In exchange for liquidating your non-exempt property and using the proceeds to repay creditors, your unsecured debts would be wiped out once and for all.
It is important to understand that not all debtors may qualify to file under this chapter, however, as you need to take a means test to determine whether or not you lack enough "disposable income" to repay creditors yourself. If you are not eligible to file under Chapter 7, you would still have the option to seek relief through Chapter 13, which would require you to develop a repayment plan.
Medical Debt & Chapter 13
While Chapter 13 bankruptcy was not designed to eliminate unsecured debts overnight, it can still be used as a viable way to rid yourself of overwhelming medical debt. Since this process may require you to reorganize your debts and develop a repayment plan that can be executed over three to five years, most filers may only be expected to repay a portion of their medical debt.
For the duration of the bankruptcy process, you can have the opportunity to chip away at unsecured debt under the protection of your repayment plan. Once this period of time has elapsed, any remaining debts may be discharged by the court—freeing you of the obligation to repay your medical expenses in full. For this reason, you should not be discouraged if you do not qualify to file under Chapter 7. Under the advisement of an attorney, you can find a suitable alternative.
What if I may incur new medical debts?
If you know that you may be incurring new medical debt soon, it would be advisable to delay the bankruptcy process. Since the court can only discharge debts that are included in your bankruptcy petition, you could be saddled with a substantial amount of non-dischargeable debt if were unable to list these expenses at the time of your filing. Additionally, you would be prohibited from seeking a second discharge of debt for a certain period of time—which could be as long as two to eight years after your initial filing.
It is recommended that you discuss an appropriate timeline with our Chicago bankruptcy attorney before submitting your petition with the court. While the idea of waiting may seem daunting, especially if you are currently facing a dire financial situation, it may ultimately work to your advantage in the end. For this reason, we encourage you to seek the advice of a legal professional today.
Contact Our Chicago Bankruptcy Lawyer
At Joseph P. Doyle, we truly understand how stressful it can be to suffer from debt. Not only does it place strain on your day-to-day life, but it may even prohibit you from planning for the future. Fortunately, relief is a possibility when you take measures to regain control of your finances. With the help of a Chicago bankruptcy attorney from our firm, you can get started immediately.