Your health is your wealth, but when it comes to medical bills, all you are concerned about is your bank balance. Generally, you will not bother about the medical bill to compromise with health, but may hamper a lot on your pocket.
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What Is Medical Bankruptcy?
Legally, medical bankruptcy does not exist. When you file for bankruptcy, the Hampton Roads court waives your credit cards, mortgages, personal loans, utility bills, and other money you owe. Medical bankruptcy is a term used for describing bankruptcy because of medical debts.
The chapter of the Bankruptcy Code does not specifically describe any term like medical bankruptcy. In recent years, the health insurance of many people in Hampton Roads has failed to cover most of their medical charges which have burdened them with medical debts. To overcome this burden, they have filed bankruptcy either through Chapter 7 or Chapter 13 bankruptcy.
Can Medical Debt Be Dischargeable in Bankruptcy?
You can declare bankruptcy to discharge medical debt, but not as an independent option. When you file a bankruptcy, your medical debt is considered as unsecured debt along with personal loans, utility bills, and car loans. Remember, filing bankruptcy in Hampton Roads will result in a bad impact on your credit report and credit scores. You may lose your non-exempt assets like a second house just to pay off your medical debts.
Here are two main types of bankruptcy where your medical debt can be forgiven –
- Chapter 7 Bankruptcy – Here, the court will sell your non-exempt assets to pay off your debts and wipe away your unsecured debts like medical debts. However, to file for Chapter 7 bankruptcy, your income must be below your state’s average income for a household of your size. A Chapter 7 bankruptcy reflects in your credit report for 10 years. During this time, you may not get any credit or loans.
- Chapter 13 Bankruptcy – In Chapter 13 bankruptcy, the court considers your debt, income, and assets to establish a three-to-five-year repayment plan of your debts. In Hampton Roads, you can get time to repay, but none of your debts can be forgiven including medical bills.