Can You Use Chapter 7 to Permanently Rid Yourself of Medical Debt?

Getting a Fresh Start When You’re Overwhelmed by Medical Bills

You’ve been sick or gotten hurt in an accident, and you’ve needed extensive medical care, some of it unreimbursed by insurance. As a result, you’ve run up substantial medical bills, which you simply can’t pay while also meeting the costs of your basic needs. You may even be unable to work because of your health issues. Every time the phone rings, you get a pit in your stomach, afraid that it’s a bill collector. You fear going to the mailbox, worried that there will be another demand for payment. Can you get relief through Chapter 7? If so, when’s the best time to file your petition?

Medical Obligations Can Be Discharged in a Chapter 7 Bankruptcy Filing

Medical bills can always be included among dischargeable debts in Chapter 7 bankruptcy. As a matter of fact, medical debt is one of the most common causes of Chapter 7 petitions.

The discharge won’t necessarily be automatic, though. You’ll still have to establish that you qualify to file for protection under Chapter 7. To do so, you’ll have to submit to the “means test,” in which you’ll demonstrate to the court that you lack the financial resources to repay your creditors over three to five years.

Timing Is Critical in a Bankruptcy Filing

It’s essential to understand that a Chapter 7 bankruptcy can discharge only those debts you have already incurred at the time of your petition. Any new medical debts that arise after you file won’t be dischargeable. Accordingly, to the extent possible, you want to wait to file your petition until your treatment is complete. Don’t count on filing another Chapter 7 bankruptcy to discharge new medical debt. The waiting period to file a new Chapter 7 petition is eight years.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we provide personal bankruptcy counsel to people throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.

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