Discharging Medical Bills in Bankruptcy

Permanently Eliminating the Obligation to Payment Medical Debt

You’ve been seriously injured in a slip and fall or motor vehicle accident, and your insurance company won’t cover all the costs of your medical care. As a consequence, your medical bills are mounting and you’ve started receiving harassing phone calls and letters from medical providers. It’s a far-too-common occurrence. Statistics show that millions of Americans incur substantial unreimbursed medical expenses every year, and that many of them find they have no recourse other than bankruptcy. Estimates are that nearly half of all bankruptcy petitions cite past-due medical bills.

Can You Discharge the Costs of Medical Care in Chapter 7?

Absolutely! Under the bankruptcy laws, debts are categorized two ways:

• Secured vs. unsecured-Secured obligations have some type of property pledged as collateral. In those situations, when a borrower is in default, the lender has the right to take the collateral to satisfy the debt. Any debt for which collateral has not been pledged is considered unsecured.
• Priority vs. non-priority-Under the bankruptcy laws, certain types of property get special treatment. For example, there are complex rules pertaining to the discharge of most tax obligations and student loan payments. Furthermore, child support arrearages may not be discharged in Chapter 7.

Are There Prerequisites for Discharging Medical Debt in Chapter 7?

To qualify to file a petition under Chapter 7, you must first submit to a “means test.” The means test allows the bankruptcy court to determine whether you have the ability to repay your creditors over a 3-to-5-year period. If you do, you cannot discharge debts through Chapter 7, but may be able to renegotiate your obligations under Chapter 13.

Contact Attorney Howard N. Sobel

At the office of Howard N. Sobel, we provide personal bankruptcy counsel to men and women 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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