Not many people know that bankruptcy may help to lower or eliminate not only your consumer debts, but also medical ones. However, the ways to handle them may differ according to the Chapter in Georgia. Your financial situation, long-term goals and amount of medical debt are factors than should be taken into account when choosing the best Chapter. Typically you will require the legal assistance from an experienced Dalton bankruptcy attorney to make the right choice. Moreover, there is some paperwork to do that includes petition and various supporting financial documents. Without a professional bankruptcy attorney, it’s quite easy to make a mistake here and deprive yourself of financial freedom. Here’s some important information you need to know when dealing with medical debt.
Also known as “liquidation bankruptcy,” Chapter 7 is the most popular type of individual bankruptcy, not just in Georgia, yet throughout the United States (110,401 cases out of total of 182,455 cases). If you qualify for Chapter 7 bankruptcy, your discharge will certainly eliminate your medical expenses along with your other general unsecured financial debts. There is no limit for medical debt you can release in Chapter 7 bankruptcy. Nevertheless, to get approved for a Chapter 7, your disposable income should be low enough to pass a means test.
Any type of medical bills you paid with your credit card will additionally be discharged (together with the rest of your credit card debt).
On the other hand, prior to getting your discharge, you may be required to repay a part of your medical debt. Nonetheless, since medical financial obligations are unsecured as well as are not priority financial debts (like child support) medical creditors usually get a lower priority than many others in Chapter 7.
The main difference between Chapter 13 and Chapter 7 is that you must accept a long-term repayment plan, called a “plan of reorganization,” which requires you to use your disposable income to make recurring payments over a period of three to five years. However, if the bankruptcy process goes smoothly, none of your assets are at threat of liquidation. That’s why cooperation with a bankruptcy attorney here is vital.
In Chapter 13 of the Bankruptcy Code, medical expenses are combined with your other general unsecured financial obligations in your payment plan. The amount you need to pay general unsecured creditors depends on your income, expenses, and also nonexempt assets. Nevertheless, remember that you could not be qualified for Chapter 13 bankruptcy if your medical expenses as well as other financial debts exceed the allowed Chapter 13 debt limits – $394,725 (for unsecured debt). Medical financial debts are dischargeable in Chapter 13, which means that when you have finished your plan, they can be removed.
If you feel like drowning in medical debt, it’s high time to think about bankruptcy. Along with reducing or eliminating your medical costs, bankruptcy can additionally aid you maintain valuable assets, get more time to pay off loans, as well as start the process of improving your credit score. Although it may be a good option, don’t go for it unless you have reviewed your financial situation with Attorney Setters. Just contact us to answer any questions or to schedule a free consultation.