What Happens to Medical Debt in Chapter 7 Bankruptcy?
If you don’t have the right amount of health insurance coverage, a serious health complication or injury that results in a trip to the hospital can cause you to be provided with costly health care bills that you have no way of paying. In many cases, these bills are unable to be repaid in a timely manner, which can cause the affected individual to file for Chapter 7 in an attempt have their debts discharged. If you’re thinking about filing for bankruptcy because of the medical debts that you owe, it’s important that you speak with a reputable attorney who can help guide you through this extensive process.
What Chapter 7 Bankruptcy Entails
Chapter 7 bankruptcy is available to certain individuals who are no longer able to make their loan payments and pay off their credit cards. When a person files for this form of bankruptcy, some of these debts will be erased and discharged. In order to repay what you owe, most of your possessions will be sold, which includes any cars that you own and even your home. You might want to consider the Chapter 13 option if you want to be able to hold on to some of your more important possessions.
While it’s possible to discharge some of the money that you owe when you file for Chapter 7, your credit score will drop substantially. The information from the filing will remain on your credit report for a period of 10 years, which will make it difficult to obtain car loans or home loans when you need one. However, improving your credit score during this time should help you when it comes time to apply for a loan. Keep in mind that the overall impact of the filing on your credit report will decrease throughout the 10-year period.
How Are the Primary Debts Handled During Chapter 7 Bankruptcy?
It’s important to understand that each type of debt is handled in a different way. The main ones that you should be aware of include secured, unsecured, priority, and non-priority debts. If the money that you owe to a certain creditor is considered to be secured, this means that the creditor will have a lien on any property you own and can foreclose or repossess in the event that you don’t make your loan payments. The money that you owe for your health care treatment isn’t considered to be secured. If the money that you owe isn’t secured by some type of property, it will be considered as unsecured.
When the money that you owe is deemed to be unsecured, it can be categorized as priority or non-priority. If the money that a creditor claims you owe is considered to be priority, this typically means that the money can’t be discharged even after you file for a bankruptcy. Alimony, child support, and certain taxes are considered to be priority. The non-priority payments that you owe are the final ones to get paid via Chapter 7. You can discharge nearly all of these payments. Examples of non-priority payments include health care bills, credit card bills, and personal loans that are unsecured.
How Medical Debt Is Handled During Chapter 7 Bankruptcy
If your health care bills have piled up and you have no way to repay them in the foreseeable future, it’s possible for these bills to be discharged when you file for bankruptcy. As a non-priority and unsecured debt, these bills won’t be repaid if the trustee for your estate is able to make some payments to creditors. In the event that a small amount of this money is repaid, the remainder of the bills will still be discharged. As such, Chapter 7 is considered to be the ideal method for getting rid of health care payments. It’s also important to understand that there’s no limit placed on how much of this money can be discharged. Even if you owe $300,000 in medical bills, all of it will invariably be discharged after you go through the Chapter 7 process.
How a The Law Offices of Adam C. Gomerman Can Assist You
The process of filing for bankruptcy and waiting for the case to be reviewed by a court can be a lengthy one. In the majority of cases, this process can be completed in around 3-4 months if no major hurdles occur. The discharge of most debts that you owe will take place at the end of this lengthy process. A professional, experienced Long Island bankruptcy lawyer can guide you through every facet of Chapter 7, which will allow you to understand what the process entails.
Some of the information that our lawyers will gather for your case include:
A list of all the creditors that you owe, which includes the information pertaining to their claims. A list of all property that you currently have in your possession. The amount and source of the income that you as a debtor currently have. A comprehensive list of your monthly living expenses, which include utilities, food, shelter, medicine, taxes, and clothing
All of this information will need to be provided when you file the official forms for bankruptcy. When you obtain the assistance of one of our attorneys, we’ll make sure that you don’t make any mistakes that could delay the process or cause your application for Chapter 7 to be denied. Once this petition is filed, the majority of collection actions against your property and assets will be temporarily stopped until the filing can be reviewed. However, there are times when this stoppage is only applicable for a short period of time. If your filing for Chapter 7 is accepted, your health care bills will be quickly discharged, which will allow you to start rebuilding your life without the burden of significant debt.
If you believe that filing for Chapter 7 bankruptcy is the best option available for you to have your health care bills discharged, contact our attorney today so that we can help assist you throughout the entire process.