When you face high medical bills after a serious illness, the financial pressure can quickly build. As your expenses continue to add up, you might start to fall behind on payments for treatment, prescriptions or ongoing care.
If your medical debt becomes unmanageable, it may be time to search for remedies. In that case, filing for bankruptcy—either Chapter 7 and Chapter 13—could be a tool to help you navigate this obstacle.
Examining Chapter 7 bankruptcy
It can be frustrating to find that insurance covers only part of your care, and you must pay a significant amount out of pocket. With every medical bill that arrives, the costs can build quickly and feel difficult to repay.
If you earn a limited income and do not own high-value assets, such as a home or a car, filing Chapter 7 bankruptcy may be a viable option worth considering. By taking this route, you may need to relinquish nonessential items, like collectibles or unused electronics, to settle some of your debt.
To qualify for Chapter 7 bankruptcy, you must first pass a means test, which compares your income to the state median. If your income falls below this threshold and you have little disposable income, this may be a suitable path for eliminating your debts.
Considering Chapter 13 repayment plans
If you have a steady income but need more time to manage health care debts, Chapter 13 bankruptcy may offer a way to ease that burden gradually. This type of bankruptcy allows you to pay off those expenses through fixed recurring payments over a span of three to five years.
Filing for bankruptcy immediately stops collection items through an automatic stay, providing instant relief from creditor pressure and halting late fees. This immediate protection is one of the benefits of Chapter 13, along with allowing you to reorganize your debts through a manageable court-approved repayment plan.
To qualify for Chapter 13, you must have a reliable source of income and your total debts must fall within certain limits set by federal law.
Weighing possible next steps
Considering bankruptcy can feel daunting, especially while you are already trying to manage overwhelming medical bills. Though this process might seem unfamiliar and complex, proper bankruptcy support and advice from professionals or trusted resources can help you understand what to expect. As you learn more about Chapter 7 and Chapter 13 bankruptcy, you may begin to see which path better aligns with your needs and goals.