Medical bankruptcy: why is it your wisest option?

Rising costs and declining insurance benefits continue to plague many Americans. Even a run-of-the mill medical event can generate huge bills. A catastrophic injury, chronic illness or major surgery can bring much worse.

If you're finding yourself unable to keep up with your medical expenses, or skipping other payments to pay your medical bills, you're not alone. Studies suggest that at least 1 in 5 Americans struggle to pay their medical bills.

In fact, medical bills are the leading cause of personal bankruptcy filings. If you're struggling with debt, bankruptcy might be the best option for you, too.

How bankruptcy relieves debt

A successful bankruptcy will get rid of your medical debts, along with other qualified debts like credit cards, payday loans and personal loans. Bankruptcy will not affect your insurance coverage or your ability to get medical care in the future.

In addition to relieving debt, bankruptcy relieves stress. When serious medical issues strike, you have plenty to worry about. Bankruptcy can put money worries aside, so that you can focus on getting better.

What type of bankruptcy is right for you?

Most consumers file either Chapter 7 or Chapter 13 bankruptcy. Your attorney will help you figure out which method is most advantageous for your personal situation.

In Chapter 7 bankruptcy, all qualified debts are eliminated. To qualify for Chapter 7, you have to pass a "means test" based on your income and living expenses. In a few instances, a debtor's property might have to be sold to pay back the creditors. However, this doesn't happen very often and many assets are exempt. Your lawyer will help you understand if this might happen to you.

In Chapter 13 bankruptcy, a payment plan is created that allows you to pay back a portion of your debt over a period of time. Once the payment plan is over, your remaining debts are discharged.

If you have questions about whether bankruptcy is right for you, schedule some time to talk with an attorney. Together, you can evaluate your options and make a plan for moving forward.

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