Are Medical Bills Dischargeable in Bankruptcy in NJ?

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Unfortunately, the American healthcare system is not perfect. One common complaint is the high costs, especially for those without insurance. If you end up in the hospital when you are not covered by an insurer or if you go through a long illness, you’re probably going to end up looking at a big pile of medical bills. You might be wondering if going through bankruptcy can help. Can it get rid of medical bills too? A Bergen County bankruptcy lawyer can tell you everything that you need to know.

Why Can Medical Bills Be Discharged By Bankruptcy?

We do have some good news. Medical bills can be discharged by going through bankruptcy. They are unsecured debt, meaning that they are not backed up by any collateral. This means that they can be discharged when you file for bankruptcy.

Take some time to go over your finances. Based on your income, assets, and debt load, is there any conceivable way to pay off these medical bills? If there does not seem to be, filing for bankruptcy and getting the chance to rebuild your financial life might be your best path forward.

Should I Use Chapter 7 or Chapter 13 Bankruptcy to Discharge Medical Bills?

Now you have probably heard that there are multiple types of bankruptcy. Two different chapters could be used to help an individual discharge their debts, including medical bills.

Chapter 7 is commonly known as a liquidation plan. All of your assets are sold off and the proceeds are used to pay off creditors, including the holders of your medical bills. If you’re worried about losing everything, don’t be. Chapter 7 offers many types of exemptions that can help you protect certain assets, like your home, from liquidation.

If you make too much money, you might be forced to use Chapter 13 bankruptcy instead. Often referred to as a “wage earner’s plan,” this type of bankruptcy allows you to come to an agreement with your creditors on a payment plan. This plan lasts three to five years usually, and after you have made all of your payments you are off the hook for your previous debts.

Will Going Bankrupt Ruin My Credit?

To be honest, filing for bankruptcy won’t exactly enhance your credit. Your credit score shows potential lenders how good you have been about making payments on debts and balancing your credit cards. Going bankrupt, even if it is mostly due to insurmountable medical bills, can hurt your reputation in the eyes of potential lenders.

It’s not all bad news though. As time goes on, your bankruptcy becomes less and less relevant. Over the next few years, you will have the chance to rebuild your credit if you practice good habits.

Schedule a Consultation Today

If you are looking at a pile of medical bills and seriously considering going through bankruptcy, you do not need to deal with this process all by yourself. Contact the Law Office of Boyd & Squitieri to set up your consultation. Our experienced attorneys can help you figure out if this is the best option for you.