Medical debt is a common cause of bankruptcy in America with medical debt impacting millions of Americans and being one of the leading causes of bankruptcy. Bankruptcy, of course, is the legal procedure by which people can restructure their debt and, ultimately, get their finances back on track. For this reason, many people will seek bankruptcy protection from their medical debts. However, not all forms of medical debt can be discharged in bankruptcy. This is as a result of federal and state law that impacts Ohio residents.
What medical debt is dischargeable?
As noted by legal counsel, there are only some forms of medical debt that can be discharged in bankruptcy. However, there are various other options. For example, you can use medical debt in conjunction with consumer bankruptcy to restructure your debt. The types of medical debt that are dischargeable will depend on the type of bankruptcy protection you seek.
Your medical debt may be discharged in a Chapter 7 bankruptcy filing. However, in order to qualify, a judge may liquidate your assets. The bankruptcy will stay on your credit report for 10 years, making it difficult for you to move forward with your financial future. Furthermore, you must have a lower-than-median household income for your state.
In a Chapter 13 bankruptcy, your medical debt is not discharged but made more manageable. All your debt will be placed into a court-created repayment plan, including your medical debt. However, when the repayment period ends, some of your debt may be discharged. It will require that you continue to earn money to make appropriate repayments.
It can be difficult to determine when you qualify for a Chapter 7 or 13 bankruptcy, but these are both viable pathways for people looking to get out of the extensive burden of medical debt.