Contrary to popular belief, most people who file for bankruptcy aren’t financially irresponsible. Rather, unforeseeable events like illness and injury are often to blame for people’s financial problems. In fact, medical expenses are a leading cause of bankruptcy. Luckily, if you are unable to pay your medical bills, bankruptcy will eliminate them and allow you to begin rebuilding your financial situation. In this article, we examine whether using bankruptcy to eliminate medical bills is a good idea.
Chapter 7 Bankruptcy and Medical Bills
Chapter 7 bankruptcy eliminates medical bills and other dischargeable debt. However, in order to qualify for chapter 7, your disposable income must be low enough to pass the chapter 7 bankruptcy means test.
Things to Consider Before Filing for Bankruptcy Due to Medical Bills
The accumulation of thousands of dollars in medical debt can be overwhelming, and the thought of wiping it all out in bankruptcy can be tempting. However, before filing for bankruptcy over medical debt, debtors should consider the following:
The likelihood of another financial crisis: After discharging your debts via chapter 7 bankruptcy, you must wait eight years before filing again. So, if you incur more medical bills following your first bankruptcy, or if some other event occurs that results in financial problems, you will be on the hook for the new debt. It is for this reason that you may want to postpone filing for bankruptcy if you expect more financial problems down the road.
The availability of medical payment assistance: Most hospitals offer assistance programs for low-income people. Depending on your income, this option may be available to you. And if it is, you may be able to hold off on filing for bankruptcy for the time being.
Other debt: Although medical debt alone is sometimes a good reason to file for bankruptcy, additional debt can often tip the scales in favor of filing. In addition to medical bills, the following types of debt are dischargeable in bankruptcy:
- Credit card debt
- Utility account balances
- Back rent
- Lease payments
- Gym memberships
- Personal loans
- Payday loans
- Auto loans
Unfortunately, however, not all obligations can be discharged in bankruptcy. For example, if you file for bankruptcy, you’ll remain responsible for things like recent income tax debt, domestic support obligations, and student loans.
Contact Our Experienced Chicago Bankruptcy Attorneys
If you’re considering filing for bankruptcy in Chicago or elsewhere in Illinois, you need a Chicago bankruptcy attorney on your side. At Chicago Bankruptcy Clinic, our experienced and professional bankruptcy attorneys will handle your Chicago bankruptcy case with efficiency and compassion. When you come to us for help, you can rest assured that we’ll do everything in our power to achieve a positive outcome in your Chicago bankruptcy case. Please contact us as soon as possible to schedule a consultation with one of our talented Chicago bankruptcy attorneys.