Can I Discharge Medical Debts in Bankruptcy?

Medical expenses are a leading cause of debt for many Illinois residents, and filing for a Chapter 7 bankruptcy or Chapter 13 bankruptcy may help with your financial burden.  Even when you have insurance, the out-of-pocket costs can be very high.  With monthly insurance premiums and deductibles, a lot of people wind up with a mountain of medical debt.  Are these medical debts dischargeable in bankruptcy?
Consumer bankruptcy often comes with many misconceptions.  However, it’s important to know that it was designed especially for the types of debt that Chicago residents accrue from substantial hospital bills, prescriptions medicine costs, and bills from visits to the doctor’s office.  Bankruptcy law is complicated, and you should always discuss your situation with an experienced Oak Park bankruptcy lawyer.  But we can provide a few key pieces of information that can help you to grasp how your medical debts will be treated in bankruptcy.
Classifying Medical Debts as Unsecured Debts
Your debts will be classified into different categories when you file for consumer bankruptcy.  Depending on the type of bankruptcy you file for, some of the debts will be dischargeable and others won’t.  When it comes to medical debts, these will be classified as general unsecured debts.  What is an unsecured debt?
Unsecured debts are those that don’t have a security interest attached to them.  In other words, for certain debts, such as car loans or mortgages, the creditor has a lien on the property, which means that the creditor still has an interest in that property.  When there’s no security interest in the property—such as credit card debt or medical debt—then that’s classified as an unsecured debt.  For bankruptcy purposes, this usually means that the debt will be fully dischargeable.  There are some exceptions, of course, and you should make sure you’ve discussed your case with a Chicago bankruptcy attorney.
Discharging Medical Bills
Depending on whether you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, the terms of your medical debt discharge will look a little bit different.
·      In a Chapter 7 bankruptcy, your medical bills will be classified as general unsecured debt, as we mentioned.  As a result, they’ll usually be completely wiped out.  What happens if you have a lot of medical debt?  The amount you owe on your medical bills won’t prevent all of it from being discharged in a Chapter 7 bankruptcy.  But it is important to remember that you must qualify for this type of bankruptcy protection first.  Speak to an Oak Park bankruptcy lawyer about your options.
·      In a Chapter 13 bankruptcy, your medical bills will still be classified as general unsecured debt, but they’ll become part of your repayment plan.  Each person’s case is different, and the amount you repay will be based on various factors such as your current income and your monthly expenses.  Keep in mind that, like with Chapter 7, you’ll need to qualify for a Chapter 13 bankruptcy.
When people with significant injuries or illnesses end up with serious medical debts, they often have turned to credit cards to make ends meet.  Like medical debts, credit card debts are categorized as general unsecured debts and can be wiped out with Chapter 7 bankruptcy or grouped with your medical bills under a Chapter 13 repayment schedule.
Contact a Chicago Bankruptcy Lawyer
At the Emerson Law Firm, we assist Illinois clients with bankruptcies every day.  Contact a Chicago bankruptcy lawyer today to learn more about how consumer bankruptcy might be able to help with your medical debt.
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