By Larry Karandreas For the past 22 years, I have noticed that a major cause of my clients’ filing for bankruptcy relief are medical issues and debt related to their medical care. If you have large medical debt or are being sued or garnished for medical debt, filing a bankruptcy will stop medical collections in its tracks.
When you file a bankruptcy, the automatic stay created by your filing prevents all further collection efforts from medical creditors. Whether you file a Chapter 7 or a Chapter 13 bankruptcy, the automatic stay protects you from your medical debt.
If you qualify for a Chapter 7 bankruptcy, medical debt will be eliminated/discharged once you complete the bankruptcy process. Chapter 7 cases are usually filed by people who are below median income (or pass the Means Test) and who have little or no unprotected (nonexempt) property.
In a Chapter 13 bankruptcy filing, you also eliminate debt, including medical debt, after making payments based on a plan of reorganization, with payments based on your ability to pay. Clients who file a Chapter 13 bankruptcy include people who are able to pay a portion of their outstanding debt over time. Even if you have filed a previous Chapter 7 bankruptcy, you may qualify for a Chapter 13 filing.
An added benefit of a Chapter 13 bankruptcy is that unlike in a Chapter 7 bankruptcy, a Chapter 13 filing will allow you to keep unprotected (nonexempt) property by making payments through your Chapter 13 plan.
Whether you file a Chapter 7 or Chapter 13 bankruptcy, it is important that you seek competent advice from an experienced bankruptcy attorney. My office offers free in-person or telephone consultations. You have nothing to lose, but your debt.