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Are medical bills overtaxing your finances? Bankruptcy can help

Medical care is of course quite expensive. An unexpected medical procedure or condition can cause immediate and severe financial repercussions. People often turn to credit cards to finance such medical costs. Paying the exorbitant cost of getting treatment can quickly drain hard-earned savings. Although comprehensive health insurance can protect against the high cost of a medical catastrophe to some degree, copayments, out-of-pocket expenses, deductibles, prescriptions, and uncovered procedures can add up quickly.

Bankruptcy can help

It is no wonder that medical debt is one of the top reasons why Americans turn to bankruptcy. Bankruptcy can offer a solution to one's seemingly hopeless financial situation. For most, Chapter 7 bankruptcy offers the best advantages. For others, Chapter 13 bankruptcy may be more appropriate.

Chapter 7 bankruptcy is, generally, the chapter preferred by those whose assets are primarily encumbered or exempt from liquidation, and who do not earn so much that they demonstrate an ability to repay creditors. In a Chapter 7 bankruptcy, a bankruptcy trustee is appointed by the court and it is the responsibility of the trustee to liquidate unencumbered nonexempt assets to pay the claims of creditors, even if only in part. But the vast majority of those who consider bankruptcy have no encumbered nonexempt assets to liquidate, so most Chapter 7 bankruptcy filers will not have any of their belongings and possessions taken away and sold out from under them. They will emerge from the Chapter 7 bankruptcy process without virtually all of the debt-including medical debt-they owed when they entered the bankruptcy process.

Chapter 13 bankruptcy, on the other hand, is the chapter preferred by those who either own unencumbered nonexempt assets that they are unwilling to see taken from them and liquidated by a bankruptcy trustee, and/or those who earn a sufficiently high income that they demonstrate an ability to repay at least a portion of their pre-filing debt. Chapter 13 bankruptcy filers get to keep their assets, regardless of their value, but will be repaying creditors at least in part over a three to five year period, discharging the unpaid portion of the debt at the conclusion of the three to five year payment plan.

A bankruptcy attorney can help

The bankruptcy process is complicated and riddled with traps for the unwary. Filing bankruptcy without the assistance of an experienced bankruptcy attorney would be ill-advised. Consult with an experienced bankruptcy attorney who can outline for you all of your debt relief options, including nonbankruptcy options, and chart a strategy for you that will best protect your assets and your income.

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