The cost of healthcare in the United States is staggering, with millions of Americans struggling to pay their medical bills. Medical debt can be a significant obstacle to achieving financial stability, but there may be hope in the form of bankruptcy. Can this legal tool provide the relief you need?
Understanding bankruptcy and medical debt
Bankruptcy is a legal process designed to help individuals and businesses resolve their debts when they can no longer meet their financial obligations. It is a complex area of law, and its impact on medical debt depends on the type of bankruptcy filed and the specific circumstances.
Two common types of bankruptcy for individuals are Chapter 7 and Chapter 13. In Wisconsin, Chapter 7, also known as liquidation bankruptcy, allows debtors to eliminate certain dischargeable debts, including medical bills. This means you are no longer legally obligated to pay them.
With Chapter 13 bankruptcy, you will be creating a repayment plan to address debts over a 3-5-year period. While this option may not completely eliminate medical debt, it can make it more manageable.
Wisconsin law and your options
Wisconsin law adheres to federal bankruptcy guidelines, meaning if you qualify for Chapter 7 bankruptcy and receive a discharge, your medical debt can be eliminated. This includes bills from hospitals, doctors and even outstanding balances for treatments.
However, filing for bankruptcy has lasting implications. It can negatively impact your credit score, making it challenging to take out loans or lines of credit in the future. Plus, not all debts, such as student loans or certain taxes, are dischargeable in bankruptcy.
Do not hesitate to work with a legal professional when filing for bankruptcy. Your attorney can advise you on which bankruptcy chapter filing best suits your needs and how it will affect your medical debts.