Medical Bills and Chapter 7 Bankruptcy (Pt. 1)

Chapter 7 Bankruptcy | Medical bills add up fast. A simple operation can cost a family thousands, and even push them into bankruptcy. In fact, medical bills are one of the most common reasons people seek relief in bankruptcy. Luckily, medical debt can be wiped out in bankruptcy.

Medical Debt

Medical bills can be one of the most expensive types of bills a family can face. A simple doctors visit and a few tests can add up to thousands of dollars. Even harder is the fact that when you’re sick, so many of those tests can mean the difference between determining an illness and getting sicker.

When you file for bankruptcy relief, debts are separated into different categories. Certain debts, like student loans (although, there are some options available) cannot be eliminated through bankruptcy. Fortunately, medical debt which is considered general unsecured debts just like your credit cards, can be eliminated through filing for bankruptcy.

Understanding Chapter 7 and Chapter 13 Bankruptcy

If you are falling behind on making payments for medical expenses and are looking for protection from lurking creditors and mounting debt, chances are you’ve considered bankruptcy. There are different kinds of bankruptcy, including: Chapter 7 bankruptcy, Chapter 13 bankruptcy, and Chapter 11. Here’s some information about how they differ from each other.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy essentially allows you to wipe your financial slate clean without the worry of making “past due” amounts.  Certain property is sold and then used to repay debts. If there is no property that can be resold, many of the debts will be discharged, or cancelled, once the bankruptcy case concludes.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows you to reorganize your debt. You work with a bankruptcy attorney to set forth a plan to repay as much as your debt as possible during a 3-5 year period. You’ll be required by a bankruptcy court to provide detailed financial statements that support your proclaimed revenue and expenses. Once the plan is created you’ll have to make monthly payments to a trustee, who in turn pays off your creditors. Once you have completed the repayment plan, you are no longer responsible for any previous debts, even if through repayment, you were not required to pay the entire amount that was owed. Chapter 13 also stops increases on interest rates, such as the interest rate owed on a credit card.

Chapter 11 Bankruptcy

While Chapter 11 is typically filed by businesses and corporations, Chapter 11 can also be used by individuals. If you are the owner of a sole proprietorship, you are the debtor. You also do not  have a separate identity from your business. Additionally, individuals will choose Chapter 11 if they can’t are unable to file Chapter 13 because their debts are too high, or their finances are complex.

A Chapter 11 restructuring plan can help a debtor balance his or her income and expenses while also regaining profitability and continuing operations. During Chapter 11, a debtor is also able to sell some or all of his or assets to pay down debt.

Typically, an individual will file Chapter 7 or Chapter 13, rather than Chapter 11.

Deciding on Chapter 7 or Chapter 13

Choosing between Chapter 13 and Chapter 7 bankruptcy is an important decision to make. Weighing both options with a bankruptcy attorney will help you decide which way to file. Also, to help your attorney help you to make the best decision, it’s necessary you provide them with accurate information regarding your finances. It’s also important to remember that some debt is not able to be discharged under either type of bankruptcy. These debts include: student loans, alimony, and child support.- Simon Resnik

Specializing in bankruptcy and foreclosure law for over 20 years. Call attorney David Pinkston for a free consultation today: 904.306.5791. #FloridaBankruptcyAttorney #FloridaBankruptcy

If you are thinking about #bankruptcy or #foreclosure in the Jacksonville, Florida area, you should call attorney David Pinkston. David is very experienced with all aspects of bankruptcy law yet very personable and easy to talk to. Call Us Today! 904.306.5791