A tradition of trust

  1. Home
  2.  » 
  3. Bankruptcy
  4.  » Which type of bankruptcy is best for those with medical debt?

Which type of bankruptcy is best for those with medical debt?

On Behalf of | Nov 3, 2023 | Bankruptcy

Many people associate the overuse of credit cards with an eventual need to file for personal bankruptcy. While it is certainly true that personal spending habits can impact the likelihood of needing bankruptcy protection, the most common reason that people file for personal bankruptcy is actually medical debt.

Even those who think they have good insurance coverage can find themselves struggling with medical bills that they cannot pay after a diagnosis of cancer or some other unexpected medical incident. Some people think that medical providers, like hospitals, will be patient and cooperative when individuals struggle to meet their financial obligations. But, many people learn the hard way that the opposite is true.

Hospitals may take people to court to place a lien against their homes or turn over debts to collection agencies that are incredibly aggressive. People often end up filing for bankruptcy because of their medical debts. What type of bankruptcy is best for those struggling with healthcare-related obligations?

Most forms of bankruptcy help with medical debt

The truth is that any type of personal bankruptcy could benefit an individual dealing with financial hardship caused by medical debts. Most people will choose between Chapter 7 and Chapter 13 bankruptcy proceedings. Both of these types of bankruptcy can allow someone to discharge unsecured debt. Medical bills are usually unsecured debts unless a hospital has already obtained a lien against someone’s home.

Both Chapter 7 and Chapter 13 bankruptcy allow someone to immediately stop collection activity and lawsuits. The courts grant an automatic stay when someone files for bankruptcy that prevents a lawsuit from moving forward and stops future collection calls. Whether someone should pursue a Chapter 7 or Chapter 13 filing will depend on the ins and outs of their financial situation.

Those with a lot of assets or higher income may need to file for Chapter 13 bankruptcy. They will need to make between three and five years of payments toward their debts before the courts will discharge remaining qualifying balances. Those with lower or no income and fewer assets may find that a Chapter 7 bankruptcy is a faster and more effective solution.

Those trying to decide what kind of bankruptcy will best help them resolve major medical debts should call the Quinn Law Firm at 814-833-2222 to discuss their matter with someone who can provide appropriate guidance and support.

FindLaw Network