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I Can’t Keep Up with My Medical Bills – When Can I File Bankrup

  • If you’re hit with a major medical problem or accident, your medical bills can mount up quickly to the point where you can no longer meet them. It’s no wonder that medical bills are one of the biggest reasons people file for bankruptcy.


    According to NerdWallet Health, bankruptcies resulting from unpaid medical bills affected nearly 2 million people. This happened even to people who have health insurance but find themselves facing uncovered charges for things like treatments for cancer or heart attack, high co-pays, uncovered pre-existing conditions, and expensive medications. The problem is made worse if illness leaves them unable to work.


    When medical bills start adding up, people often take desperate measures that make their situation worse. They may charge medical costs on credit cards; but with sky-high interest rates for unpaid balances, debt only mounts. They deplete their savings and wind up unable to pay for necessities such as rent, food and utilities.  They may borrow from friends and family; but if they can’t go back to work, they can’t pay back their debts.


    Eventually, medical bills get sent to third-party collections, which brings harassing calls and letters and threats of repossessions, foreclosure, garnishment of wages and lawsuits. Nearly 3 in 10 Americans, even those who had insurance, had an unpaid medical debt sent to a collection agency, according to a recent Consumer Reports survey.


    How Bankruptcy Helps


    There is a solution to the downward spiral caused by high medical bills. Filing a Chapter 7 or Chapter 13 bankruptcy will allow you to get a fresh start and can eliminate most of your medical and other unsecured debt. In many cases, medical bills will be forgiven entirely after a bankruptcy.


    The most common types of personal bankruptcy are Chapter 7 and Chapter 13.


    Chapter 7 bankruptcy


    Chapter 7 bankruptcy is over in a few months, so you can begin rebuilding credit quickly. You might have to sell property to help pay off creditors, but there are Ohio bankruptcy exemptions that cannot be sold, including clothing, cars, equipment used for work (like tools) and household furnishings. If you do not own a great deal of property, your possessions may all be exempt, qualifying you for a “no asset” case.


    Medical bills, judgments from medical providers and other unsecured debts are dischargeable in Chapter 7 bankruptcy. In addition, there is an automatic stay that goes into effect so that creditors and collection agencies will be legally obligated to stop harassing you and moving forward on lawsuits or garnishments against you.


    To file Chapter 7, your income must be low enough to meet the criteria for the Ohio “means test.”  If you are not eligible for Chapter 7, Chapter 13 may still be an option.


    Chapter 13 bankruptcy


    Chapter 13 bankruptcy is for high-income earners who have some money to repay debt, but not enough to meet monthly obligations. Chapter 13 provides a court-approved plan to affordably pay all or a percentage of your debts over a three- to five-year period. The bulk of your payments will probably go toward mortgage and car payments, past-due support and tax obligations.


    As in Chapter 7, medical bills are last in the payment hierarchy, so unsecured creditors, including medical providers, will only receive a portion of whatever is left. Any medical bills remaining after you complete the plan will be forgiven when you receive the discharge order.


    As long as you make the required monthly payments, the creditors will not be able to contact you, and you may get to keep assets such as your house and car.


    Contact an attorney for a consultation


    If your debts are becoming overwhelming and you are thinking about filing for bankruptcy, it makes sense to speak to an experienced bankruptcy attorney in Dayton. Most attorneys offer a free consultation to examine your situation to see if bankruptcy is right for you. It’s always better to file sooner rather than later, as delaying can only make your situation worse.