Chapter 7 Bankruptcy: Addressing Medical Debt

Nothing is worse than an unexpected illness. In addition to health complications, you often confront the financial consequences of medical treatment.

Moreover, rising health care costs typically enhance the effect of what appears to be a "simple" illness or procedure. Furthermore, as employers continue to cut insurance benefits, medical problems can tend to become financially insurmountable.

According to a 2007 Harvard Medical School and Ohio University survey of personal bankruptcy filers, nearly 66 percent of bankruptcy petitions were filed due to medical-related debts. Most respondents had more than $5,000 (or 10 percent of their pretax income) in medical expenses, mortgaged their homes to fund the medical treatment or lost income due to their illnesses.

The study found that medically bankrupt families had an average of $17,943 in out-of-pocket expenses, including $26,971 for those who lacked insurance and $17,749 for those who had insurance. Approximately 80 percent of the study participants had health insurance.

Fortunately, there are ways to deal with medical debt. If you are overwhelmed with expenses, Chapter 7 bankruptcy is one possible road to security. Chapter 7 bankruptcy is a form of personal bankruptcy, which clears out unsecured debts. The process generally moves fairly quickly. The average case takes as little as four months from the time of filing.

Bankruptcy courts classify medical debt as unsecured debt, which means that it may be discharged within the process. An unsecured debt is one that is not protected by a physical item of property as collateral. If you are unable make payments on unsecured debts, creditors cannot generally recover any items. However, they may be able to sue or garnish your wages.

Within the Chapter 7 process, all eligible debts included in the filing should be discharged -- any legal obligation to repay is extinguished.

If you elect this form of bankruptcy, all information related to your medical bills, including outstanding payments, must be included in the filing.

Medical issues can happen unexpectedly and create a deep void in your pocket. On top of hefty medical bills, prolonged illness or injury can interfere with your ability to work. Missed work equates to less income, which additionally complicates the financial battle.

Chapter 7 bankruptcy provides the opportunity for medical-debt management. It does not take long before a filer can be on the path to a new beginning.

If you are overwhelmed by serious medical debt, contact an experienced bankruptcy lawyer today. An attorney can help you sort through your finances and construct a solid debt-reducing plan.

Article provided by Helbing Law Office LLC
Visit us at www.helbinglaw.com

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