Can You File Bankruptcy on Medical Bills

Can you file bankruptcy on medical bills? The short answer is yes. A bankruptcy proceeding can allow you to discharge medical bills. Unfortunately, however, they are not always discharged. In order to be eligible for discharge, they must be considered “unsecured,” meaning that they are not paid by collateral or property of any other kind. In addition, the creditor must admit that there is no property from which to pay the debt as it falls due. Many types of debts do have this feature including credit cards and personal loans. Medical debts usually do not, which makes them ineligible for discharge.

According to the National Institutes of Health, 40% of bankruptcies are due to medical bills. Annual bankruptcy filings for medical bills or lost wages from illness or injury have an estimate of 530,000.

Many Americans are facing significant medical debt. Studies show that one in four American families is having trouble paying their medical bills. According to the report, 7 in 10 respondents to the survey said that high medical costs caused them to:

  • Reduce or postpone vacations and major household purchases (72%)
  • Reduce their spending on food, clothing, and basic household items (70%)
  • Use up all or most of their savings (59%)

Bankruptcy may be an option if your family is having trouble paying their medical bills on time. This can help you get a fresh start and give you a better financial position.

How Can You Get Medical Debt Forgiven?

Medical debts, like many other types of debts, can be discharged in bankruptcy if they are followed and you meet the requirements under different bankruptcy chapters. To be eligible for Chapter 7, the most common type of bankruptcy, you must pass the means testing in Florida. Even if you aren’t eligible for Chapter 7, you may file Chapter 13 or another Chapter and list any medical debts in your petition. The most common types are credit card debt, medical debt, personal loans, department store revolving accounts, and other debts.

There are several types of medical debts that you can discharge in bankruptcy.

  • Doctor bills
  • Hospital bills
  • Lab, MRI, CT scan, and other medical tests
  • Rehabilitation services
  • Costs of pharmaceuticals
  • Medical equipment bills

You can find out if your medical bills are eligible for bankruptcy discharge by speaking to a skilled, affordable bankruptcy lawyer.

Medical Bills Can Help You Lose Your Home

Massive medical bills can have a devastating effect on your financial life. It can make it difficult to manage your finances and leave little money for other expenses, such as your rent or mortgage. Your debt collector cannot threaten you with a medical invoice. Unpaid medical bills can lead to financial ruin.

You can usually stay in your home if you file bankruptcy for medical bills. Sometimes, filing for bankruptcy can stop foreclosure proceedings. Our skilled bankruptcy attorney can help you decide which option is best for your family, and how to maintain a living arrangement.

Medical Debt and Your Credit Score

Remember to consider the impact of unpaid medical bills on your credit score. In some cases, overdue medical bills could cause credit scores to drop by 50 to 100 points. According to a recent Consumer Reports survey, nearly 3 out of 10 Americans have unpaid medical debts sent to collection agencies. About half of all collection amounts and negative credit information affect 43 million Americans. Low credit scores can make it difficult to get a mortgage, job, or insurance.

What Happens to Medical Bills After Filing Chapter 7?

All debt collectors’ phone calls and letters must cease after you file Chapter 7. Debt collectors cannot harass you, even if you have large medical expenses. In your bankruptcy petition, you will need to list all hospitals, clinics, and nursing homes that you owe money as well as any medical equipment providers. You must include everyone on the list. Otherwise, you could be responsible for any remaining debts even after bankruptcy is discharged. A Chapter 7 bankruptcy usually takes several months.

Statute of Limitations on Debt in Florida

Florida’s statute of limitations for collecting medical debt is usually five years (§95.11, Fla. Stat.). This does not mean that the debt has been eliminated. You still owe it. This does not mean that debt collectors cannot take legal action against you. The unpaid debt will remain on your credit report and negatively affect your credit score, even after the five-year statute expires and creditors stop calling.

Contact Our Experienced Bankruptcy Lawyer Today

Yes, you can file for bankruptcy on medical bills. If a person is unable to make their healthcare payments they can file bankruptcy, provided that they have no disposable income above living expenses.

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A bankruptcy attorney can help you if you’re struggling with insurmountable debt. The bankruptcy attorneys at Bruner Wright P.A., are compassionate and skilled and will be there to help you through the bankruptcy process. Our firm has helped many clients to get on their feet again and start over. Call us now to learn more about how we can assist you.