Medical Bill Debt, Bankruptcy and Your Options
Medical debt is a crippling issue for Wisconsin, and there’s no telling how it might harm communities. Medical bill bankruptcy is a serious issue that can be hard to anticipate. Despite your best efforts, you may fall into irrecoverable debt and need help.
Current Affairs in Wisconsin
Wisconsin isn’t the most debt-ridden state, but that doesn’t mean people aren’t suffering. For instance, although one study showed that the South was the most debt-burdened, the same data also revealed that Milwaukee County was among the nation’s leaders in bankruptcy filings.
It’s also worth noting that Wisconsin may be home to especially vulnerable populations. Thanks to steady poverty rates and other factors, people who incur high medical debts could face other hardships as a result. For instance, a low-income individual who experienced a severe accident might see their credit score fall because they couldn’t afford the bill.
The Scope of Medical Debt
This problem might not be such a dire issue if people’s finances weren’t already precariously risky. With the total U.S. consumer debt blasting past $13 trillion by late 2017, Americans took on more credit card, vehicle, mortgage and education liabilities.
Wisconsinites are no different than their neighbors in other states. For the typical household with thousands of dollars in existing debts, unexpected medical debt might be the last straw.
Why Is Medical Bill Bankruptcy a Possible Solution
Medical debt is a form of unsecured debt. In other words, they’re debts that you take on without having to put up any collateral.
Bankruptcy law is designed to relieve consumers who can’t pay their debts. The rules clearly define which kinds of obligations are excusable and which aren’t. When it comes to unsecured debts, things like student loans and child support can’t be discharged, or excused. Fortunately, there’s no such limitation on medical bills.
Specific Rules to Bear in Mind
Can you discharge all of your medical debts by filing for bankruptcy? There are a few things to consider first.
Two common bankruptcy types are Chapter 7, or restructuring, and Chapter 13, or reorganization. Each kind of filing resolves the debt in its own way, and there are restrictions on who can use which option.
- In a Chapter 13 filing, you’ll try to come up with a repayment plan that works for both you and your creditors. Although unsecured debts are excusable, they all get lumped together, and there’s a total limit of $394,725.
- With Chapter 7, you’ll have a bankruptcy trustee sell some of your property to satisfy your creditors. It doesn’t matter how much unsecured debt you owe, but you need to pass a means test to qualify.
Is filing for a Wisconsin bankruptcy right for you? Contact us at (262) 827-0375 to get the advice of an experienced Wisconsin bankruptcy attorney. If you have significant medical debts, it could be the wisest move.