Medical Debt Piling Up? Bankruptcy Might Help
The COVID-19 crisis is subsiding here in the United States. Thankfully, daily death tolls are decreasing, and many Americans are fully vaccinated. One of many lingering problems from the pandemic for some individuals will be medical bills relating to treatment for the coronavirus or its effects.
A few days ago, I spoke to a gentleman who owed medical bills totaling six figures, and these were bills not being covered by insurance. His question was straightforward: Can bankruptcy help me deal with these medical bills?
Recently, Newsweek magazine published an article detailing some of the staggering amounts of medical debt many Americans are struggling under right now. The article can be found here
Of course, every person’s situation is unique and so the answer to this gentleman’s question requires more information. Generally, though, unpaid medical bills are some of the easiest debts to discharge or get rid of in a bankruptcy case, either under chapter 7 or chapter 13 bankruptcy.
Medical bills are classified as unsecured general claims in a bankruptcy case. Medical bills do not receive priority status, like certain tax claims or child support obligations, and medical bills are not secured by collateral, such as with real estate or vehicles.
Hence, medical bills often receive very little to no payout in a bankruptcy case and the legal obligation to pay them is typically discharged. Consequently, whether a person’s unpaid medical debt stems from care for COVID-19 or other treatments, a bankruptcy case can often help to relieve the financial burden.
The worst approach is to ignore the bills. Medical debt can be referred to collection agencies that can damage credit reports, lower credit scores, and sometimes lead to lawsuits and judgments. Instead of ignoring the problem, please contact us at Sasser Law Firm. We offer free consultations. If you are struggling with unpaid medical debt, let us see if we can help.
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For more than 20 years, the Sasser Law Firm has been helping individuals and business owners sort through financial hardships to see the light at the end of the tunnel. Our North Carolina bankruptcy attorneys are all board-certified specialists, which means we have passed a complex exam, undergone a thorough peer review, and continue to earn legal education credits in this ever-evolving area of law.
