How medical debt often leads to bankruptcy

On Behalf of | Sep 21, 2018 | bankruptcy

American health care is often anything but cheap, which is why it is easy for medical bills to stack up. Especially after a number of costly procedures after an illness or injury, you may be swimming in debt, even if you have health insurance.

If you find yourself sinking under the weight of your medical debt, claiming Chapter 7 bankruptcy may be an option you are looking toward. Claiming bankruptcy can be scary, but the good news is that you are not alone. An NPR poll shows that more than 25% of adults suffer severe financial trouble after the cost of medical care.

Can filing for bankruptcy help eliminate medical debt?

Filing for Chapter 7 bankruptcy is the easiest and most common way to wipe out medical debt, as well as other forms of debt. Chapter 7 bankruptcy allows nonexempt assets to be sold and the money to go toward paying off debt. If you meet the qualifications of filing for this type of bankruptcy, the court can discharge your medical debt. In order to determine if you can qualify for Chapter 7 bankruptcy, you must pass the means test.

One can also file for medical debt relief with Chapter 13 bankruptcy. The difference between Chapter 7 and 13 is that this type of bankruptcy sets up a pay-back plan. In many cases, individuals who file for bankruptcy under Chapter 13 do not end up paying back all of their medical debt, with the rest being discharged like it is for Chapter 7.