Bankruptcy Eligibility for Medical Debt: Are You Covered?

 Posted on June 10, 2024 in Medical Debt

Medical debt can be a heavy burden, especially when it becomes overwhelming and unmanageable. If you are struggling with medical debt and considering bankruptcy as a potential solution, make sure you understand your options and eligibility. A Texas lawyer can help you understand how bankruptcy can provide relief when you face significant medical debt.

What You Should First Know About Medical Debt and Bankruptcy

Medical debt is an ongoing issue that affects countless individuals and families across the United States. Be sure you understand that you are not alone in this struggle. A study conducted by the American Journal of Public Health found that nearly 67% of all bankruptcies in the U.S. are tied to medical expenses. This staggering statistic highlights the significant impact that healthcare costs can have on personal finances.

When faced with too many medical bills, it is natural to feel overwhelmed and unsure of where to turn. However, it is important to know that bankruptcy is a legal tool designed to provide relief for those in financial distress. By filing for bankruptcy, you can potentially discharge your medical debt and other qualifying unsecured debts, giving you a chance to start fresh and rebuild your financial foundation. While the decision to pursue bankruptcy should not be taken lightly, it can offer a path toward stability and peace of mind when medical expenses become unmanageable.

Eligibility for Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also known as "liquidation" bankruptcy, is often the most suitable option for those with primarily unsecured debts, such as medical bills. In Texas, passing the "means test" is required for Chapter 7 eligibility. Generally, if your income is lower than the median, you qualify for Chapter 7.

Qualification is possible even with above-median income if your disposable income cannot cover certain unsecured debts. Texas exemption laws can protect certain assets like your main residence and personal vehicle.

Chapter 13 Bankruptcy: An Alternative Option

If you do not qualify for Chapter 7, have a steady income, and want to protect certain assets, Chapter 13 bankruptcy might be a viable alternative. Under Chapter 13, you propose a repayment plan to your creditors, typically lasting three to five years. This allows you to catch up on missed payments and restructure your debts, including medical bills.

One advantage of Chapter 13 is that it can help you keep your property while getting relief from overwhelming medical debt. However, you should have a reliable source of income to make the required payments under the repayment plan.

Contact a San Antonio, TX Bankruptcy Attorney

If you are drowning in medical debt and considering bankruptcy, know that you are not alone. The law provides options for those facing unmanageable medical bills. By understanding your eligibility and working with a New Braunfels, TX bankruptcy lawyer, you can find relief and take steps towards a better financial outcome. Call Law Offices of Chance M. McGhee at 210-342-3400 to schedule your free consultation.