Can I File Bankruptcy To Get Rid of Medical Bills?

The top causes of personal bankruptcy, according to Investopedia, are medical bills, job loss, excess reliance on credit, divorce and unexpected expenses. A study by Harvard University found that more than 60 percent of bankruptcies are due to unexpected medical costs, and it’s not just the uninsured that are at risk.

Many of those who file for bankruptcy due to medical expenses have insurance—as many as 78 percents. But an unexpected medical problem comes with many expenses that insurance will not cover, such as travel expenses to and from treatment, insurance co-pays, and lost wages due to illness. These expenses can be catastrophic to a family’s finances.

However, the term “medical bankruptcy” is not a legal term. The media uses the term medical bankruptcy to refer to bankruptcies that are caused by unexpected medical expenses. If you have medical expenses that are so large that you can’t keep up, you can choose between the two bankruptcy options available to individuals: Chapter 7 or Chapter 13 bankruptcy. Bankruptcy law does not distinguish between the different causes of bankruptcy.

Chapter 7 bankruptcy is a total liquidation bankruptcy. State laws will determine what assets you can keep, and what must be liquidated to pay creditors. After the bankruptcy is completed, you will be discharged of your debt. The bankruptcy remains on your credit for the next ten years. You must qualify for Chapter 7 bankruptcy under the financial standards of the Means Test.

Chapter 13 bankruptcy helps organize your debt into a payment plan that you pay off over the next three to five years. When your payment plan has been completed, the debt is discharged. The bankruptcy remains on your credit for the next seven years.

Over the past 33 years, the Law Offices of Christopher A. Benson has helped over 2,500 of Washington clients take control of their financial situation. We can stop your garnishment and change your monthly payments for all your combined unsecured debt, and if you have had more than $600 garnished within the last 90 days, we can get all of the money back in most cases. But you have to act quickly–call (253) 815-6940 for your free consultation, or email us today. Evening and weekend appointments available.

Christopher Benson

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