Bankruptcy Can Help with Medical Debt

Medical Bill

While bankruptcy is often associated with poor financial judgment, this is simply not the case in the majority of situations. Many bankruptcy cases arise due to circumstances beyond a person’s control – such as a sudden injuries or illness that requires costly medical care that is not covered by insurance. In fact, in recent years, it was reported that medical bills were the primary reason for bankruptcy filing in the United States.

Medical events can happen to anyone at any time and the cost of treatment is often extensive. Medical issues do not discriminate and often someone who otherwise has a solid handle on their finances can find themselves with tens of thousands of dollars of debt. Nonpayment of medical debt can quickly ruin a great credit score, can cause collectors to harass you, and can even result in a legal judgment against you. You may even face a wage garnishment to collect on the judgment.

For the above reasons, it is critical to address overwhelming medical debt as soon as possible. Because medical bills are dischargeable in bankruptcy, this is a common solution for individuals who cannot pay their medical bills. The following are the two main options for handling medical debt in bankruptcy.

  • Chapter 7 – Chapter 7 bankruptcy can result in the complete discharge of your medical bills without requiring any additional payments on your part. However, some people who are facing medical debt have substantial income that may disqualify them from Chapter 7 or they have significant assets that may be vulnerable in a Chapter 7 case.
  • Chapter 13 – If you want to protect assets or if you do not qualify for Chapter 7, you can reorganize your debt into a manageable payment plan for three to five years through Chapter 13 bankruptcy. After you make the required payments, the rest of your debt will be discharged. This often greatly reduces the amount you have to pay overall.

An Experienced Salt Lake City Bankruptcy Attorney Can Help You

The dedicated bankruptcy lawyers at JLT Law have been helping people with medical debt in Utah find the right solution for relief. We will evaluate your situation for free, so please call us today at (801) 896-9444 for more information.