Medical bills are among the leading reasons individuals have to file for bankruptcy. Studies have shown that significant percentage of bankruptcies include considerable medical debts. Medical bankruptcy is not just limited to medical bills themselves as other problems that arise with an illness such as loss of a job can contribute to a debtor’s circumstances. Medical bankruptcy is a valid means to eliminate these medical debts.
Although there is no specific “medical bankruptcy” under the bankruptcy code, any individual with overwhelming medical debts can choose to eliminate those medical debts and discharge them under any chapter of the bankruptcy code. The good news is that the means test usually does not apply where there are significant medical debts as medical debts are not considered “consumer” debts subject to a presumption of abuse. This gives debtors more flexibility and more options when it comes to medical bankruptcy.
A medical bankruptcy will also eliminate all of an individual other debts including credit card, old utility debts and personal loans. A debtor cannot just pick and choose which debts to discharge in a medical bankruptcy and must list and discharge all creditors.
What if You May Incur More Medical Bills?
If you are still undergoing treatment or foresee continued medical expenses in the future, you may want to discuss the timing of a medical bankruptcy with your bankruptcy attorney. You may want to consider waiting to file your medical bankruptcy case until your medical treatment is completed. Or you may want to consider a Chapter 13 bankruptcy and convert to a Chapter 7 bankruptcy if ongoing medical expenses become overwhelming as debts incurred in Chapter 13 are dischargeable upon conversion to a Chapter 7 bankruptcy.
Will My Doctor Stop Treating Me if I Discharge the Money I Owe to Him?
Filers of medical bankruptcies are always concerned about their continued relationship with their doctors and medical providers if they discharge their medical debts. Although medical providers (with the exception of hospital emergency room treatments) can refuse to treat you after their debt has been discharged in bankruptcy, most medical providers will not deny you continued treatment if you pay ongoing bills as they are incurred. After all, you are not the first patient to default on overwhelming medical debts in distressed circumstances and will not be the last for that medical provider. Plus most doctors realize that a debtor cannot re-file for bankruptcy for a period of time so those ongoing medical expenses are somewhat insulated from a future discharge. If all else fails, there are plenty of other doctors and medical providers that will treat you and will not know about a past bankruptcy. Lastly, there is no law preventing you from voluntarily re-paying an old medical debt after discharge if you have the means to do so. Call or email us today for a free consultation.