Can You File Bankruptcy For Medical Bills
You can file for bankruptcy to discharge or manage medical bills. Medical debt is considered unsecured debt, meaning it’s not tied to any specific asset, and it can be included in bankruptcy filings. There are two primary types of bankruptcy that individuals often file in the U.S. to manage medical debt:
1. Chapter 7 Bankruptcy (Liquidation Bankruptcy):
- How it works: In a Chapter 7 bankruptcy, non-exempt assets may be sold to pay off creditors, but most people who file do not have significant assets that can be liquidated. After the process, most unsecured debts, including medical bills, can be discharged (eliminated).
- Impact on medical bills: Medical bills are typically fully discharged in Chapter 7, meaning you are no longer legally obligated to pay them.
- Eligibility: To qualify for Chapter 7, you must pass a “means test,” which examines your income, expenses, and ability to pay back debts. If your income is below the median for your state, you likely qualify.
2. Chapter 13 Bankruptcy (Reorganization Bankruptcy):
- How it works: In a Chapter 13 bankruptcy, you create a repayment plan to pay back some or all of your debts over a three to five-year period. Unsecured debts like medical bills are included in the repayment plan, but after the repayment period, any remaining unsecured debts may be discharged.
- Impact on medical bills: Medical bills are part of the debts that can be reorganized and partially repaid under this plan. Any remaining amount after the plan period may be discharged.
- Eligibility: Chapter 13 is an option for individuals who do not qualify for Chapter 7 or who want to keep certain assets (such as a home or car) that they might lose under Chapter 7. It also requires a regular income.
Considerations:
- Credit score: Filing for bankruptcy will negatively impact your credit score for several years (up to 10 years for Chapter 7 and 7 years for Chapter 13).
- Consult an attorney: Bankruptcy laws can be complex, and consulting with a bankruptcy attorney can help you determine which type of bankruptcy is best for your situation.
Overall, bankruptcy is a legal way to manage overwhelming medical debt and can provide relief for individuals facing financial hardship due to medical expenses.
Can You Negotiate Medical Bills?
Yes, you can file for bankruptcy to discharge or manage medical bills. Medical debt is considered unsecured debt, meaning it’s not tied to any specific asset, and it can be included in bankruptcy filings. There are two primary types of bankruptcy that individuals often file in the U.S. to manage medical debt:
1. Chapter 7 Bankruptcy (Liquidation Bankruptcy):
- How it works: In a Chapter 7 bankruptcy, non-exempt assets may be sold to pay off creditors, but most people who file do not have significant assets that can be liquidated. After the process, most unsecured debts, including medical bills, can be discharged (eliminated).
- Impact on medical bills: Medical bills are typically fully discharged in Chapter 7, meaning you are no longer legally obligated to pay them.
- Eligibility: To qualify for Chapter 7, you must pass a “means test,” which examines your income, expenses, and ability to pay back debts. If your income is below the median for your state, you likely qualify.
2. Chapter 13 Bankruptcy (Reorganization Bankruptcy):
- How it works: In a Chapter 13 bankruptcy, you create a repayment plan to pay back some or all of your debts over a three to five-year period. Unsecured debts like medical bills are included in the repayment plan, but after the repayment period, any remaining unsecured debts may be discharged.
- Impact on medical bills: Medical bills are part of the debts that can be reorganized and partially repaid under this plan. Any remaining amount after the plan period may be discharged.
- Eligibility: Chapter 13 is an option for individuals who do not qualify for Chapter 7 or who want to keep certain assets (such as a home or car) that they might lose under Chapter 7. It also requires a regular income.
Considerations:
- Credit score: Filing for bankruptcy will negatively impact your credit score for several years (up to 10 years for Chapter 7 and 7 years for Chapter 13).
- Consult an attorney: Bankruptcy laws can be complex, and consulting with a bankruptcy attorney can help you determine which type of bankruptcy is best for your situation.
Overall, bankruptcy is a legal way to manage overwhelming medical debt and can provide relief for individuals facing financial hardship due to medical expenses.