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You’ve probably heard someone use the term “medical bankruptcy.” It is a term commonly used by individuals who are either going through a medically related financial crisis, or know someone who is facing serious medical debt. Although medical bankruptcy is not a legal term, it is a useful term to describe a financial remedy for a person who may have reached the end of their rope due to medical debt.
Medical bankruptcy can be a confusing term because there is no legal remedy available specifically for medical debt. In general, bankruptcy is the dissolution or reorganization of some or all of a person’s debts. When you file for any type of bankruptcy, you must include all of your debt. This will apply to home mortgage loans, car loans, credit cards and medical loans. There are many types of bankruptcy, but most individuals who file bankruptcy for medical debt will typically file for Chapter 7 or Chapter 13 bankruptcy. A Chapter 7 bankruptcy may allow a person to eliminate their debt, while a Chapter 13 bankruptcy may allow a person to reorganize their debt into a 3-5 year plan, while at the same time paying off their debt. Can reduce the principle on the loan.
The idea that a medical bankruptcy exists as a legal remedy may have developed because courts handle medical debt differently than other types of debt. Not all debts will be treated equally in the court. A bankruptcy court typically divides an individual’s debt into two categories: secured debt or unsecured debt. Secured loans are a type of loan that is typically tied to properties such as auto loans or home mortgages. Unsecured debt is usually not attached to the property, yet it can often be eliminated or greatly reduced through bankruptcy. It is important to realize that medical loans are generally classified as unsecured loans.
While the term “medical bankruptcy” is not a legal term, it is a useful way for a person to describe how their finances have fallen into chaos. One Experienced Bankruptcy Lawyer Inquiring about medical bankruptcy the client will immediately understand what the client needs. A bankruptcy attorney can then inform them of how bankruptcy can resolve their financial hardship caused by medical debt, and even help the individual decide whether to file for Chapter 7 or Chapter 13. is best suited for their situation or not. Once an individual has decided on the best course of action, the attorney will ease them through the legal process of filing, and obtaining, bankruptcy.
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