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Are Medical Bills Dischargeable in Bankruptcy?

On Behalf of | Feb 21, 2018 | Bankruptcy Basics, Chapter 13 Bankruptcy, Medical Bills and Bankruptcy

Healthcare is expensive, ridiculously expensive. Regardless of how much money you have saved or how solid your finances are, unexpected medical expenses can absolutely devastate your best-laid plans. This is particularly true when you are under-insured or if your health insurance denies coverage of a claim. All of a sudden, you can find yourself faced with tens of thousands of dollars in medical bills and hospitals harassing you for payment.

Some people exhaust their savings or open credit cards to try to get themselves from under their medical debt. In addition, medical providers may resort to filing lawsuits, obtaining orders against you, and seeking to garnish your wages. It can all feel hopeless and can really take a toll on your mental health. If you have already tried appealing your health insurance company’s denial of coverage, or have been unsuccessful in negotiating lower medical bills, then bankruptcy may be a realistic option for you.

Medical Bills and Chapter 7 Bankruptcy

In a Chapter 7 proceeding, medical debt is classified as unsecured debt. This means that it is not tied to any collateral, such as your house or your car. In addition, medical debt is not considered a priority debt, such as child support obligations or tax bills. In essence, medical debts are not protected or prioritized during bankruptcy proceedings. Therefore, when a bankruptcy trustee attempts to pay off your creditors, the holder of your medical debt is among the last in line to collect anything.

Significantly, the benefits of a Chapter 7 bankruptcy are that your medical debts are wiped clean, as are the credit card debts that you ran up when making payments on those medical bills. Further, there is no limit to the amount of medical debt that bankruptcy will eliminate.

Chapter 13 Bankruptcy

Under Chapter 13, the medical debts are also treated as unsecured. Those debts are treated like all other unsecured creditors in a Chapter 13 Plan. Often, those creditors get little or no payment.

Let Us Help You Move Forward

If you have insurmountable medical bills, call us for help. At Levitt & Slafkes, P.C., we know the emotional toll that these debts can take and will use our three decades of experience to help you find relief. We want our clients to know they have options, and to fully understand the decisions they are being asked to make. If you want an attorney who will treat you with compassion and respect, contact Levitt & Slafkes, P.C. to schedule a free consultation. Our office number is (973) 323-2953, or you can reach us online.

We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years.