Medical bills can put pressure on a household’s finances, even when someone has health insurance. Deductibles, co-pays, travel for treatment and income lost during an illness can make existing debts harder to manage.
‘Medical bankruptcy’ is not a separate chapter of bankruptcy. Chapter 7 and Chapter 13 are common options for individuals with medical debt, but availability depends on the person’s circumstances and the requirements of each chapter. Medical bills are generally unsecured debts and may be dischargeable. Sources: U.S. Bankruptcy Court: medical bills and unsecured debts; U.S. Courts: discharge in bankruptcy. Other types of debt, liens, and when a debt was incurred can affect the result. A review should cover all debts and assets, not just the medical bills.
In Chapter 7, a trustee may sell nonexempt assets to pay creditors; filing does not mean all property must be sold. The exemptions available to you require review under applicable federal and state law. Source: 11 U.S.C. § 522(b). A discharge generally eliminates personal liability for qualifying prefiling debts, including many medical bills, but not every debt is discharged. Individual consumer debtors must address the applicable means-test requirements; income above the state median does not by itself rule out Chapter 7. Sources: U.S. Courts: Chapter 7 bankruptcy; U.S. Trustee Program: means testing.
Chapter 13 allows eligible individuals with regular income to propose a repayment plan, usually lasting three to five years. The amount paid to unsecured creditors depends on the legal requirements and the person’s finances; it is not necessarily the full balance. A discharge of qualifying remaining debts generally follows completion of the plan and other requirements. Source: 11 U.S.C. § 1328(a), (f), (g).
Bankruptcy can affect credit reports. Federal law generally permits bankruptcy reporting for up to ten years from the order for relief, subject to exceptions; the clock does not start when the payment plan ends. Source: 15 U.S.C. § 1681c(a)(1), (b).
Over the past 34 years, the Law Offices of Christopher A. Benson has helped over 2,500 of Washington clients take control of their financial situation. We can review whether bankruptcy may help stop your garnishment and address your debts through a repayment plan. Sources: 11 U.S.C. § 362(a)–(d); U.S. Courts: Chapter 13 bankruptcy. If money has already been garnished, recovery may be possible in some cases, depending on the timing of the transfers, applicable exemptions and other legal requirements. A refund is not automatic or guaranteed. Sources: 11 U.S.C. § 547(b)–(c), (e)–(g); 11 U.S.C. § 522(g)–(i); 11 U.S.C. § 550(a). But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.
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