What will happen to my medical debt if I file bankruptcy?
If you are like many other people across Florida, you are carrying some amount of debt stemming from medical expenses. Health care can be enormously expensive and millions of Americans are struggling to pay for their medical needs.
For some people, debt accumulates over time as a result of long-term illnesses or care; for others, the cost of one procedure or medical visit is enough to bury them in unmanageable debt. Whatever the case may be for you, if medical debt is wreaking havoc on your financial well-being, then you should know what happens to it if you file for bankruptcy protection.
Medical debt is unsecured debt, which we discussed in our last blog post. This means that it can be — and typically is — discharged if you file for Chapter 7 bankruptcy protection. Discharging medical debt, particularly if it made up a significant portion of your overall debt, can provide considerable financial relief.
Even if all your debt is not discharged in Chapter 7, no longer having to pay off medical bills and other discharged debts can give you the breathing room you need to pay off remaining debts.
If you want to avoid Chapter 7 bankruptcy, you may want to consider Chapter 13 bankruptcy to help you deal with medical debt. Pursuing this option means that your debts will be prioritized and repaid.
Medical debt, along with other types of unsecured debt, will not necessarily be completely paid off through Chapter 13. However, it will allow creditors to collect as much as they would have if your assets would have been liquidated in Chapter 7.
Deciding how you want to handle your debt can be very difficult and overwhelming, especially when you may already be coping with the physical and mental effects of a health condition. Discussing your situation with a lawyer can help you identify a solution that can ease the stress and anxiety of debt and allow you to move toward a brighter financial future.