Medical debt does not receive “special” treatment from other debt in bankruptcy. The truth is, medical debt can be discharge in bankruptcy like other unsecured debt. In fact, a report by Nerdwallet found that 20% of Americans struggle with medical debt. And medical debt is one of the leading causes of bankruptcy filings in the United States.
Like credit cards, payday loans, and online loans, medical debt is “unsecured” debt. It is not tied to property that a creditor can sell to pay off the debt. A chapter 7 bankruptcy filing can wipe out unsecured debt – including medical debt – completely. A chapter 13 reorganization may also allow for payment of pennies-on-the-dollar toward medical and other unsecured debt.
Discharge of medical debt may not cause you to lose your doctor.
Physicians, hospitals, and other medical service providers understand that the cost of treatment can be overwhelming. And bankruptcy may be the only option. Bankruptcy is also factored in as a “cost of doing business.” Physicians also understand that patients often want to continue seeing them for treatment. Many physicians will agree to voluntary payment options in return for continued service. While physicians and other medical service providers cannot demand repayment of a discharged debt, the Bankruptcy Code does not prevent the voluntary payment of debt after discharge.
So what debt is not discharged in bankruptcy?
While medical debt can be discharged in bankruptcy, there are certain debts that will survive a bankruptcy. This debt includes most student loans, child support, alimony, most taxes, court fines, and criminal restitution. It can also include debt from fraud, larceny, embezzlement, and personal injury claims from driving while intoxicated.
Bankruptcy may be the right option if you are struggling with medical debt.
On average, 35 million American adults will be contacted by collections agencies for unpaid medical bills. You don’t need to be a statistic. If you’re struggling with medical debt, contact me at 317-883.7350 to discuss whether bankruptcy may be right option for you. In as little as four months, you may be on the path to recovery and back towards the life you want to live!