USING BANKRUPTCY TO RESOLVE MEDICAL DEBT

Some clients survive periods of devastating illnesses and recover, only to face a mountain of hospital and doctor bills.  It is possible to use bankruptcy to reduce or even wipe out that debt, depending upon your circumstances.

Filing a bankruptcy petition automatically imposes an “automatic stay” which stops creditors from suing you, and enforcing judgments against you.  The court sends written notice to all creditors which you have listed on your petition so that harassing phone calls will stop.

If you file for Chapter 7 bankruptcy, your medical debt may be fully discharged.  Chapter 7 offers a fresh start from your medical creditors.  There are rules about who can file a Chapter 7 petition.  For example, there is a state by state income limit for Chapter 7 debtors.  We usually review that with you when you first call my office.  

Also, if you previously filed for bankruptcy, there is a eight year waiting period from date of discharge for your Chapter 7 case.  If you filed Chapter 13, there is a six year waiting period.

We also need to review your assets and liabilities to make sure that filing bankruptcy is right for you.   If for instance you own a home, you would not want to file Chapter 7 if you have an excessive amount of home equity that may cause the bankruptcy trustee to decide to sell your home.  We perform a thorough analysis of these kinds of issues from the start to ensure that filing bankruptcy helps (and not hurts) you.

In a Chapter 13 case, you will be making monthly payments to a trustee for a three to five year period.  Whether those payments will include your medical debt depends on your disposable income within the meaning of the Bankruptcy Code.  We use a computer program to analyze your income and debts to determine the amount of your likely monthly trustee payment.  If you make all required monthly trustee payments during the three to five year period, then any unpaid part of your medical bills will be discharged at the end of the Chapter 13 case.

If you need relief from crushing medical expenses and lawsuits, give me a call today to see how bankruptcy can help.

 

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Charles D. Whelan III has been committed to excellence for over 30 years. With offices located centrally in New Jersey, he is able to provide businesses and individuals with excellent legal services.

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