How Does Medical Debt Work with Bankruptcy?

by | May 8, 2012 | Legal Services

Many people assume that the only reason to hire a Schaumburg Bankruptcy lawyer is due to loss of a job or excessive credit card spending. However, are you aware that the biggest cause of filing bankruptcy across the United States is due to medical debt? Information from the American Journal of Medicine confirms that nearly 60 percent of all the bankruptcy filings in the US are from health care bills that people are unable to pay.

Although people might be covered by insurance, they are still not immune to piling up medical debt and expenses. Most insurance policies have caps on the amount they will cover and unfortunately, your body doesn’t check for approval from the insurance company in regards to healing. When people are sick or injured, their ability to work is also compromised. And once again, even though there is protection in the form of unemployment and disability insurance; these things do have limits on how much can be paid out. There is also tax liabilities which can also cause people to file for bankruptcy protection.

Traditionally, there are two basic filings available in Schaumburg Bankruptcy cases to protect people from extravagant medical expenses. When you hire a Schaumburg Bankruptcy lawyer, you will be given the choice to file either Chapter 7 or Chapter 13 bankruptcy. When you file Chapter 7, the Federal Government will liquidate all your unsecured debt, including your medical bills in most cases. The problem is that you can only file for Chapter 7 only once in a six-year period. If you obtain more medical debt during that 6-year period, you will most likely be responsible for paying this debt. Also, if you own assets, the Federal Government has the right to seize these assets in order to pay for your unsecured debt.

Another option and a based on new bankruptcy laws implemented in 2010, the more popular option, is to file Chapter 13 protection. This option is best for people who have steady jobs, can afford to pay the monthly bills and still have the resources to make a minimal monthly payment to the Federal Government to pay their debt. This process is 100% overseen by the US Federal Court and is paid over a period of 3-5 years. This option is also nice for people who own their assets as by choosing this option, the Federal Government can’t seize your assets, which is a welcome relief for people who are trying to heal from existing medical conditions.

As the medical profession goes through massive changes, people still get sick and injured. There will always be medical expenses and many times, there will be financial stress related to this process. Fortunately, people in Schaumburg can hire bankruptcy professionals to assist them in their time of need.

When you are trying to recover your health, battling the court system should be the last thing on your mind. Let an experience Schaumburg Bankruptcy team help you through this process by visiting them on-line at


bankruptcy Chicago, bankruptcy Lawyers

bankruptcy Chicago, bankruptcy Lawyers

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