According to statistics released by the U.S. Bankruptcy Court, the number of annual bankruptcy filings in 2024 reached a total of 517,308. This strategy allows individuals and businesses unable to pay their debts to have their debts forgiven or come up with repayment plans under the protection of federal courts.
Medical bills and medical bills can push people into bankruptcy. If you or a family member gets into an accident or develops an illness that requires long-term treatment, you can quickly incur huge medical bills that even your insurance won’t be able to pay for.
According to a lawyer specializing in medical debt bankruptcy, if you can no longer handle your debts, filing for bankruptcy may be another way to relieve your financial worries.
Let’s take a look at how bankruptcy can wipe out huge medical bills.
Understanding Bankruptcy: What is Bankruptcy and How Does It Work?
If you’re feeling overwhelmed by debt, understanding bankruptcy can be an important step toward regaining financial stability. This is much more than just a legal term for those considering it.
Victims of crime can receive significant relief through bankruptcy to avoid having to worry about medical bills and other expenses. Bankruptcy essentially provides an opportunity to either completely wipe out your debts or restructure your debts and get a fresh start.
It’s comforting to know that there is a way out of this situation, especially considering the fact that you can file for bankruptcy.
Eliminate medical bills and restore financial stability. You are not alone in facing this struggle. Many people have already experienced it and received relief before you. Bankruptcy can help you put your priorities first and work on rebuilding your financial health.
By learning this process, you will be able to take responsibility for your situation and, if possible, reach out to others who have had the same experience and express a sense of belonging and hope.
Types of Bankruptcy: Which is Right for You?
How do you know which type of bankruptcy is right for you? In most cases, it depends on your financial situation. Chapter 7 is usually the best option for any type of fresh start. This eliminates most of your unsecured debts, including medical expenses.
This is a quick procedure and allows you to preserve some important assets. However, Chapter 13 is for people who have a steady income and can pay off some debt over time, allowing them to maintain their assets while making manageable payments.
Think about your income, assets, and the distant future. A few sessions with a bankruptcy attorney can be a great source of support in making the right choices for your needs.
You are not alone in taking this opposite path. Many have traveled before.
Bankruptcy application process
Bankruptcy can be scary, but knowing exactly how things work can make the whole process easier to understand. Gather all financial documents regarding income, debt, and assets.
It is always helpful to consider hiring a bankruptcy attorney. A lawyer can guide you on what to do and help you make better decisions. The next step is to complete the actual bankruptcy documents and submit them to the court along with attending a credit counseling session.
Then, once a claim is filed and a lawsuit is initiated, an injunction is automatically triggered, suspending the creditor’s actions and providing some relief. Shortly thereafter, you will be required to attend a meeting of creditors, during which you will be required to answer questions regarding your financial matters.
Remember that there are people who have gone down this path before and found salvation through it.
How bankruptcy affects medical debt
Although the idea may be overwhelming, knowing how bankruptcy affects medical debt may bring some clarity during difficult times. Bankruptcy discharges your debts, and in this case, in most cases, your medical debts will be discharged and you won’t have to pay them.
This is a great relief for someone who always has bills coming up and has to take care of everything possible. It is important to note that bankruptcy erases unsecured debts such as medical bills. Secured debts, such as mortgages and car loans, remain in place.
You should carefully consider the impact on your credit score. With significant relief from high medical costs, you can refocus on your own health and creating a life for your fellow travelers who understand this journey.
Financial reconstruction after bankruptcy
Now that bankruptcy has provided some relief from dire medical bills, the next step is to start rebuilding my finances. The first step is to create a budget that fits your new financial situation.
This way, you’ll always know how to track your spending and differentiate between what you need and what you want. You can also rebuild your credit by applying for a secured credit card. This shows the lender that you are responsible.
Look for a credit counseling service that can provide support and guidance. You want to gather a community around you. Perhaps friends or online groups. Everyone understands the path. That way, sharing will make you feel less alone. It will take time to resolve, but remember that with true intent, you can get your finances back.
