The single greatest cause of consumer bankruptcy filings is medical debt. Many of our past clients had medical insurance, but were still forced to file Chapter 7 or Chapter 13 bankruptcy in order to hold on to their property and protect their paychecks. 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 people believe if they pay the hospital just a little bit each month, they will not be sued. They are surprised to discover differently. 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. That is, 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.
At Pond Law Firm in Jackson, Mississippi, we offer a free consultation in which we can learn about your income, debts, assets and goals, and then inform you of your options under the Bankruptcy Code.
As previously discussed, many Chapter 13 plans provide for zero payments to unsecured creditors — just like Chapter 7 — while other Chapter 13 plans provide for low payments to unsecured creditors. Many of our clients’ 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 bankruptcy is right for 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. We bring more than 25 years of experience and are here to help.
Unfortunately, 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.
Jackson-based Pond Law Firm is a federally designated debt relief agency. Our lawyer helps people file for bankruptcy relief under the Bankruptcy Code.