It is not clear how many bankruptcies are prompted by medical debt, but studies estimate that it is a substantial factor in quite a few. People in Florida who are considering bankruptcy because of medical debt should be aware that bankruptcy cannot be done piecemeal, covering only medical debts. Filing for bankruptcy will include all eligible debt.
Debts that cannot be discharged includes most income tax and student loans along with back child and spousal support. However, credit card debt and most other unsecured debt is eligible. Individuals who wish to keep secured property, such as a home, must continue making payments after filing for bankruptcy. People may qualify for either Chapter 7 or Chapter 13 bankruptcy. This is generally based on income although other factors may be taken into account as well.
Filing for bankruptcy does not mean losing everything. People who file for Chapter 7 can ask for certain property to be exempt, and in most cases, this request is granted. With a Chapter 13 bankruptcy, debts are reorganized and a person is placed on a payment plan for three to five years. However, even if all debts are not paid off at the end of this payment period, any remaining eligible debt is discharged. In most cases, medical providers continue to treat patients even after a bankruptcy filing.
People who are struggling with debt might want to consult an attorney about their options and the possibility of filing for Chapter 7. One advantage of filing for bankruptcy is that all creditor action must stop immediately. This means that everything from phone calls to lawsuits have to stop. An attorney might also be able to reassure clients about misconceptions associated with bankruptcy, explaining to them that credit can eventually be rebuilt afterwards.