It’s not uncommon for persons to be saddled with medical bills and feel as if they will never catch up with paying them. This can be particularly true if they suffered catastrophic injuries in a car accident. If the at-fault party did not have sufficient insurance to compensate the victim for their damages, the victim may be forced to pay them on their own. At some point, the individual may feel that filing for bankruptcy is their only viable option for getting their financial affairs back in order.
If this describes your circumstances, whether or not you are still recovering from your injuries, hiring a bankruptcy lawyer can greatly simplify the process. Having a seasoned legal professional representing you can ensure that you follow all of the many legal requirements and bankruptcy laws.
The Separation of Debts
Not all debts are handled the same during a bankruptcy process. The individual’s debts will be separated into three categories: secured, unsecured, and priority claims.
- Debts such as spousal support (alimony) and child support cannot be discharged in a bankruptcy and so therefore the individual must continue to make those payments as decided previously by the court. If the debtor liquidates their assets, the individual’s domestic support obligations as well as certain other types of debts will be prioritized for payment.
- Medical bills are considered unsecured debts. They do not receive priority status for payment, similar to credit card debt.
Chapter 7 and Chapter 13 Bankruptcy
With the insight provided by your bankruptcy attorney, you will make the decision of whether to file Chapter 7 or Chapter 13 bankruptcy. Regardless of which type of bankruptcy is right for you, you will be able to include medical debt.
- Chapter 7 bankruptcy will allow you to include your medical bills for discharge. This will also be true for most of your other general unsecured debt. There is not a set limit as to the dollar value of your medical debts which can be discharged in a Chapter 7 bankruptcy. In addition, if you paid a portion (or all) of your medical bills with credit cards, the remaining balances on your cards from medical debt can be discharged. Note that to qualify for filing Chapter 7 bankruptcy, your annual income must not exceed a certain dollar amount. Talk to your bankruptcy lawyer to confirm that you are eligible to file for Chapter 7.
- Chapter 13 bankruptcy is different from Chapter 7, in that the individual’s bills are lumped together with their other unsecured debts. The repayment plan will take those debts into consideration as well as the person’s nonexempt assets, expenses, and income. As with Chapter 7, Chapter 13 bankruptcy requires that the individual does not earn over a certain amount of annual income.
If you suffered a serious injury or condition and have been financially devastated as a result, bankruptcy may be an option for you. Talk to a bankruptcy lawyer in Waterbury, CT to determine if you are eligible and which form of bankruptcy might best meet your needs.
Thanks to The Law Offices of Ronald I. Chorches for their insight into bankruptcy law and medical bills.