Bankruptcy as a Solution to Medical Debt & Disabilities
Overwhelming medical bills can be a serious financial burden. In fact, medical debt is one of the most common reasons that people file for bankruptcy. A study published in the American Journal of Public Health found that 66.5 percent of all bankruptcy cases were the result of medical issues, either because of how expensive treatment was or because the illness caused the patient to miss a significant period of work.
If you’re struggling with medical debt, filing for bankruptcy may be the best way for you to regain your financial footing. Erin B. Shank and her Killeen bankruptcy firm can help you evaluate your options and find the best option forward. Bankruptcy cases are the only focus at Erin’s firm. She has decades of experience helping Texans through the bankruptcy process. Get a free initial consultation by calling one of her offices or visiting the contact page today.
Can You File Bankruptcy on Medical Bills?
There is not a separate form of relief called “medical bankruptcy.” However, you may be able to have your medical debts discharged in either a Chapter 7 or Chapter 13 bankruptcy filing. However, you cannot limit a bankruptcy filing to only deal with your medical debts. When you file for bankruptcy, all your debts will be considered, along with the general state of your finances.
Eliminating Medical Debt in Chapter 7 Bankruptcy
Before you can have your medical debts wiped out in bankruptcy, you’ll have to see if you qualify. To be eligible for Chapter 7 bankruptcy and have your medical debts discharged, you will need to qualify under the bankruptcy “means test.”
The means test involves looking at your average income for the past six months and determining whether or not your income level is less than the median income for other Texas households of similar sizes. If your income is less than the median income for a similarly sized household, you are eligible to file for bankruptcy. If your income is above the median level, you will need to gather additional information about your income and expenses.
Once you have all the available information, subtract your allowable expenses from your total income and look at the result. If your average monthly income is less than the current average median income for a Texas household of the same size as yours, you presumptively pass the means test. If your income is above this figure, you may still qualify for bankruptcy, but further calculations will be necessary. A bankruptcy attorney in Killeen can help you determine if you qualify for Chapter 7 bankruptcy.
How Can Bankruptcy Affect Disability Benefits from the Government?
One key area of concern when it comes to bankruptcy and medical debt is how filing for bankruptcy can affect your disability benefits. Fortunately, many disability benefits are protected from your creditors in a bankruptcy case. In most cases, Social Security benefits are protected by bankruptcy laws.
Other kinds of benefits do not necessarily enjoy the same protections under the law. Depending on your specific circumstances, your creditors or the bankruptcy trustee may be able to claim some of your benefits from state, local, or private organizations. However, you may also be able to protect these benefits with specific bankruptcy exemptions in Texas. A bankruptcy lawyer can tell you more.
A Killeen Bankruptcy Attorney Can Help
Medical debt in Texas can be crushing, but a Killeen bankruptcy lawyer can help. Erin B. Shank has the knowledge, training, and experience to guide you through this bankruptcy process as quickly and easily as possible. Erin Shank can help you determine if bankruptcy is the right option for your situation and if you qualify for Chapter 7 or Chapter 13 bankruptcy.
Erin knows how stressful medical debt can be, and she wants to help you get back on your feet. Get your free case review today by calling the office or visiting the contact page.