Tuesday, March 7, 2017

Is A Medical Bankruptcy Fact Or Fiction?

People file bankruptcy for any number of reasons. Some people are drowning in credit card debt, while others are stuck in a home that is worth far less than what is owed. Even when every effort is made to restructure your debt; either by negotiating with your creditors for lower interest rates, offering reasonable repayment plans, or by asking your mortgage lender to modify your mortgage loan, there are still cases where bankruptcy is the only viable option. For a lot of people, the case of having overwhelming medical debt can be the deciding factor in whether to file bankruptcy or try to work something out with their lenders. This could be because medical expenses can quickly spiral out of control, with a simply overnight hospital stay costing in the tens of thousands of dollars. But with all of the talk about changes to the healthcare system and laws, it is no wonder people are confused about whether there is such a thing as a “medical bankruptcy”.

The truth is bankruptcy can be filed for any number of reasons when a consumer has more debt than they can pay, such as:
•           Losing a job, which makes it near impossible to keep up with all of your bills (like the house payment, car loan, credit card and medical bills).
•           Accumulating a lot of credit card debt.
•           Having to take out student loans to finish school.

The only test that is in place when filing bankruptcy is the means test, and it takes a look at your secured debt as it relates to your income. If you have any amount of disposable income left over after paying secured obligations (a house or car), then you may be required to file a Chapter 13 and put that disposable income towards your unsecured debts (credit cards and doctor bills). But this does not mean that your filing is referred to as a “medical bankruptcy”, even though it could be that the majority of your unsecured debt is made up of medical expenses. If that is the case, you can honestly say the reason you had to file bankruptcy is due to having an overwhelming amount of medical bills, but your case will not be formally classified that way by the Courts. If you have more expenses than you can pay, of any kind, call us to find out what will work best for you. We will explain your options and help you make a decision that will get you out of debt, put a stop to collections cases including wage garnishments and foreclosures, and give you a fresh financial start.

For more information about bankruptcy, call us today or reach us online at www.law-ri.com. We will help by coming up with solutions that work for you and have multiple locations for more convenient one on one office visits.

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