Are Your Medical Bills Sending You Over The Financial Ledge?

Are your medical bills making you figuratively sick? Unfortunately, you are far from alone. According to, approximately 1.7 million people in 2013 had to file for bankruptcy because of their unpaid medical bills. Unpaid medical bills are, in fact, the number one cause of bankruptcies in the United States today. So if your family's medical bills are absolutely crushing you financially, should you follow suit? Is bankruptcy the answer for you?

Bankruptcy Options

If your situation is dire and it appears as if there will be no possible way for you to repay your current debts, you may have to consider filing for bankruptcy, either Chapter 13 or Chapter 7. So what are the differences between the two?

Chapter 7 Bankruptcy

If you file a Chapter 7 bankruptcy, most of your debts will be canceled. The following types of debt, though, cannot be discharged in a Chapter 7 bankruptcy, including but not limited to:

  • Court judgments you have to pay for an injury or a death you committed while under the influence.
  • Student loans
  • Alimony or child support that you owe

If you do file for Chapter 7 protection, you will not be walking away from your debt completely. In fact, some of your property may have to be sold, with the proceeds going to pay your creditors. In addition, not everyone can qualify for Chapter 7 bankruptcy. The following will disqualify you from applying for Chapter 7 protection:

  • Your income for the last six months immediately preceding the bankruptcy filing is more than the median income for a family of the same size in your particular state. 
  • You have a disposable income that is more than a certain amount, which is determined by a Chapter 7 means test. If you do have a disposable income that would allow you to pay back those you owe, you may be eligible to file for Chapter 13 bankruptcy. An attorney who specializes in Chapter 13 and 7 bankruptcy filings can help you with the Chapter 7 means test, which can be difficult to complete and to understand. 
  • You've filed a Chapter 7 bankruptcy within the last eight years. If so, you will not be able to apply again. 

Chapter 13 Bankruptcy

With a Chapter 13 bankruptcy, the court will allow you to pay your creditors off over a three- to five-year time frame. This type of bankruptcy will allow you to keep your property. This is a great option for someone who sincerely wants to pay back those they owe. For example, if you owe companies that you have had a longstanding relationship with, you probably do not want to leave these entities with nothing, as it could adversely affect their financial stability in the long run. Other reasons why you would want to consider Chapter 13 bankruptcy:

  • If you want to make up missed mortgage payments so that you won't lose your home. 
  • If you have missed payments on your car and don't want your vehicle to be repossessed. 

If you hire an attorney who files for Chapter 13 bankruptcy, an automatic stay is put in place that prohibits a lender from taking your home. However, it is important that you keep up your mortgage payments because a lender can resume foreclosure proceedings if you should once again fail to make your payments during the Chapter 13. 

When considering whether or not you should file for either a Chapter 13 or Chapter 7 bankruptcy, it is important to hire an attorney that is experienced in this field as it could possibly mean the difference from regaining your financial stability or losing it all. 

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