Without health insurance, one medical crisis could send your finances into a downward spiral. While some people are able to work their way out of a bad financial situation, others can struggle with doing so. If you are overwhelmed with medical debt, here is what you need to know.
Can Bankruptcy Help?
For many people, the answer to medical debt is bankruptcy. In bankruptcies, there are unsecured and secured debts. Debts that are not backed by collateral are considered to be unsecured debts. Your medical bills are considered to be unsecured.
Unsecured debts are not given priority in a bankruptcy. In fact, once your bankruptcy is complete, the debts will be discharged by the court. The discharge means you will no longer be responsible for the debts.
It is important to note that if you choose to file for a Chapter 13 bankruptcy, the trustee will take some of the funds that are being applied to your debts and pay on some of your medical debt. The trustee will determine how much goes towards the debt. At the end of your repayment plan, any remaining medical debts will be discharged.
What Should You Do to Prepare for Filing?
Before filing your bankruptcy petition, there are a few things you should do. For instance, you should search for new medical providers. Unfortunately, filing for bankruptcy means that you will not be paying those debts to your current providers and it is doubtful they will want to continue treating you without receiving payment.
You should also complete a credit counseling course. To file for bankruptcy, you have to provide proof to the court clerk when you file your petition that you finished the course. During the course, you will be required to review your finances with a counselor and learn of other options you could possibly use to handle your medical debts.
Your filing documents need to include the total amounts owed for your debts. You also need to provide names and contact information for your medical providers. Now is the time to collect copies of bills and other documentation you will need to complete your filing.
Medical debt can have serious consequences if it is not properly handled. Bankruptcy is one option that can not only get rid of medical debts, but also other types of debts, including credit cards. Talk to a bankruptcy attorney to learn more about preparing for a filing. To learn more, contact a company like Tim George & Associates.