Medical debt is an especially difficult problem for most people. Despite all the planning and proper financial steps someone takes, a significant injury or illness can wipe out someone’s entire savings and still have debt. Is it possible to overcome medical debt through bankruptcy?
A single day in an American hospital can cost a patient more than $5,000 per day. With rates that high, a few weeks of recovery in a hospital can quickly eliminate any savings the patient had for just such an emergency. When someone is burdened with so much debt, it can take decades to pay off, so is it possible to overcome this debt in another way?
How bankruptcy can help
There are two forms of personal bankruptcy that can take control of medical debt. Both options of Chapter 13 and Chapter 7 bankruptcy have their benefits and drawbacks, and one option may be better for you than the other. While bankruptcy cannot eliminate debts like a mortgage or a lease, it can help with unsecured debts like medical debt.
Chapter 13 bankruptcy allows the applicant to restructure their monthly payments into a single payment plan that lasts between three and five years. Once the debtor has reached the end of the payment plan, the government discharges any remaining applicable debts. This option is preferable for those who have a regular and reliable income that they can use to make the monthly payments.
In Chapter 7 bankruptcy, there are no monthly payments, and the government discharges a much more substantial amount of the debt for you. In exchange for no payment plans, the applicant may be forced to sell non-essential assets like a second home, retirement accounts, and valuables. However, in most cases, the debtor is able to keep all of their property due to the applicable bankruptcy exemptions. If a sale is necessary, the money from that sale goes to pay off the debt, and the court will discharge any remaining debt.
You do not have to live with medical debt
Massive medical bills can remove your ability to rebuild a savings, have disposable income, or provide your family with that they need. Talk to a bankruptcy attorney to see what you can do to overcome medical debt and protect your best interests.