The single greatest cause of consumer bankruptcy filings is medical debt! Many of our clients who have medical insurance are still forced into filing Chapter 7 or Chapter 13 in order to defend their property and paychecks from hospital collection lawsuits. Imagine that! Responsible individuals who spend hard-earned income for health insurance coverage are still bankrupted by the 20 percent or more the insurance company did not pay! Many of our clients think that if they pay the hospital "something" each month that they cannot be sued, only to later learn that this is not true. It is important to realize that hospital and other medical debts are "unsecured." If you qualify for Chapter 7 relief the unsecured medical debt will be "discharged," e.g., you will no longer owe the debt at the conclusion of your case. If you do not qualify for Chapter 7 ("means test," recent prior filing, need to protect nonexempt assets, etc.), Chapter 13 can provide an excellent alternative for dealing with medical and hospital debt.
As previously discussed, many Chapter 13 plans provide for "zero" payments to unsecured creditors — just like Chapter 7 — while many Chapter 13 plans provide for very low payments to unsecured creditors. Many of our client's Chapter 13 plans are approved with "10 percent" payment to unsecured creditors. If you repay 10 percent of your total medical debt through your Chapter 13 plan, the unpaid 90 percent will be discharged upon completion of your plan. You won't owe the rest to the creditor after your plan has been completed and you are granted a Chapter 13 discharge.
Whether Chapter 7 or Chapter 13 is right for you and your circumstances depends on a myriad of factors, a discussion of which is beyond the scope of this website. However, don't assume that you do not have options when faced with catastrophic medical debt. At Pond law Firm we offer a FREE initial consultation, and after learning more about your income, debts, assets and goals we can inform you of all your options under the Bankruptcy Code. We have more than 20 years of experience and we are here to help! Nobody gets sick on purpose. People don't schedule heart attacks in order to avoid paying creditors. The fact of the matter is that bad things happen to good people and the stated purpose of the Bankruptcy Code is to "give the honest but unfortunate debtor a fresh start." That statement seems tailor-made for hard-working folks who have suffered from an unexpected illness or accident.
To get in touch with us and to schedule a free initial consultation to discuss medical debt relief with an attorney, call 601-948-4878 or email the firm.
The Jackson-based Pond Law Firm is a federally designated debt relief agency. Our lawyers help people file for bankruptcy relief under the Bankruptcy Code.