If a person is injured or is sick and needs medical care, he or she can incur expensive medical bills. While he or she should be focused on healing, instead they may be worried about how to pay these expenses.
Statistics indicate that many individuals file for bankruptcy because they cannot afford to pay their medical bills. Some people believe that if they have health insurance, they won’t have any expenses to pay. However, health insurance policies can have limits and high deductibles and unfortunately, the health insurance company may also deny the individual’s claim.
Chapter 7 vs. Chapter 13
There may be two options to discharge medical debt in bankruptcy. With a Chapter 7 bankruptcy, all of the individual’s medical debt may be discharged however, he or she may have to meet a means test to qualify. This test reviews the filer’s income and expenses compared to the state’s average income to determine whether the individual qualifies for Chapter 7.
With a Chapter 13 bankruptcy, all of the individual’s debt is combined which includes medical debt. However, the borrower must adhere to a repayment plan which is based on his or her income, bills, assets and other expenses. This type of bankruptcy also places a limit on how much debt can be discharged overall.
Medical debt is not the individual’s fault and filing for bankruptcy can provide a fresh financial start. If he or she would like guidance about how to file for bankruptcy, an experienced attorney can help.