With healthcare costs seemingly ever on the rise and the U.S. population aging by the year, it is no surprise that unpaid medical bills have become a major problem across America. In fact, medical debt has become the number one cause of bankruptcy filings, surpassing both credit card bills and unpaid mortgages. Each year, over two million people file for bankruptcy due to medical bills. Many of these individuals have health insurance. One study recently discovered that nearly 10 million adults with health insurance will still accumulate medical debt they cannot pay off each year. High deductible plans form a large part of the problem as they make it hard for families earning an average salary to pay the substantial out-of-pocket maximums which can reach between $5,000 and $10,000.
Medical debt often manages to accumulate quickly, and paying back some of these substantial bills can divert funds you need to pay for essential living expenses. For many families, at some point continuing to pay these medical bills becomes impossible. For those who have reached this point, bankruptcy can offer a means for Arizona residents burdened by oppressive medical debt to find financial freedom.
Not all debts will be treated the same in a Chapter 7 bankruptcy. Some can be wiped out entirely while others will be exempt and not included in the action. Secured debts are debts in which the creditor has a lien on your property and the ability to repossess or foreclose on it if you fail to make payments. This includes mortgages and car loans. Medical bills do not fall within this category.
Unsecured debts are all other debts not secured by a piece of property. This type of debt can be divided into priority and non-priority unsecured debts. Priority debts are generally non-dischargeable and will be paid first in a Chapter 7 bankruptcy. These include taxes, child support, and alimony. All other debts, including medical debts, fall into unsecured, non-priority debts.
For debtors with excessive medical debts, the good news is that this type of debt can usually be entirely eliminated in a Chapter 7 bankruptcy. As a non-priority, unsecured debt, you will not generally have to pay back any of your medical bills in a Chapter 7 action. Even if a portion of your medical debt is paid through the bankruptcy, the remainder will be wiped out once you receive your discharge.
There are no limitations on the amount of medical debt you can discharge in a Chapter 7 bankruptcy. However, you will need to pas the means test in order to be eligible for this type of bankruptcy. A knowledgeable bankruptcy attorney will assess your eligibility and the possible benefits of a Chapter 7 bankruptcy for you.
Ariano & Reppucci: Phoenix Bankruptcy Attorneys Assisting Those in Medical Debt to Find Financial Freedom
With healthcare costs rising by the year and millions of Americans uninsured or holding policies with high deductibles, more and more individuals are strapped down by excessive medical debt. If you and your family are struggling to pay back outstanding medical bills or if continuing to make payments is causing you considerable financial strain, you could find relief through Chapter 7 bankruptcy. The Arizona Bankruptcy Attorneys at Ariano & Reppucci have assisted countless individuals struggling with medical bills to relieve their debt burden and start fresh. Our dedicated bankruptcy attorneys have years of experience handling both Chapter 7 and Chapter 13 actions. When you call Ariano & Reppucci, you can rest assured that you will always speak directly to an attorney and have an attorney prepare your bankruptcy petition. Our top bankruptcy attorneys offer low flat fees and quality representation. Call Ariano & Reppucci today at (623) 777-2980 to schedule your free consultation.
