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Can I File Bankruptcy on Medical Bills?

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The Affordable Care Act eased the medical bill crisis for many families. Nevertheless, over 100 million Americans struggle to pay high medical bills. Normally, doctors and hospitals quickly turn over unpaid accounts to aggressive debt collectors. These organizations have absolutely no patience and, unlike doctors, have no relationship with debtors. So, they are willing to do whatever it takes to collect medical debt as quickly as possible

Medical debt collectors relentlessly collect a debt, and an Indiana bankruptcy lawyer relentlessly works for families like yours. Attorneys use little-known legal loopholes to help more debtors qualify for bankruptcy. Next, an attorney uses advanced insight to complete the complex forms. A lawyer does not simply fill in the blanks. Then, when the case goes to court, an Indiana bankruptcy lawyer works even harder to uphold your legal and financial rights.

Medical Bill Discharge

Most people with high medical bills and other high unsecured debts file for Chapter 7. This form of consumer bankruptcy eliminates most unsecured debts in as little as six months.

Details matter in these cases. Proper creditor notice is a good example. Delinquent medical accounts often change hands several times. One debt buyer frequently sells an account to another debt buyer. If the current account holder does not get proper notice, that debt buyer could claim ignorance and continue aggressive collection tactics.

“Discharge” means a judge eliminates the legal requirement to repay a debt. The collateral consequences of that debt remain. For example, if patients owe money, many doctors refuse to treat them, whether these patients file bankruptcy or not. A workaround is available in these cases. More on that below.

Additionally, many bill collectors use credit or property liens to force debtors to pay these debts. A bankruptcy judge does not have the power to remove a lien. An Indiana bankruptcy lawyer must take care of these liens in separate proceedings.

Medical bills are standard unsecured debts. Therefore, unless the trustee (person who oversees a bankruptcy for a judge) has solid evidence of bankruptcy fraud, judges usually discharge medical bill debt without asking any questions.

Medical Bill Reaffirmation

Fundamentally, Indiana bankruptcy lawyers file these petitions so debtors regain control over their own finances. Reaffirmation agreements are often a critical part of this process.

Many debtors voluntarily reaffirm certain debts. Perhaps they want to stay in a doctor’s good graces or keep a credit card for emergencies. Others reaffirm executory contracts, like internet service agreements. 

A reaffirmation agreement gives a lawyer a chance to renegotiate important financial terms, like the interest rate and balance due. Medical and other creditors are highly motivated to make favorable deals in these situations. They know the debtor can easily walk away and convert the debt to a dischargeable debt, leaving them with nothing.

The reaffirmation agreement is a powerful tool, but one that must be used sparingly. If a debtor executes too many reaffirmation agreements, the trustee often questions the debtor’s motivations for filing bankruptcy. These questions could lead to a detailed investigation that most debtors want to avoid.

Connect With a Tough-Minded Lake County Attorney

No matter what financial emergency you face, bankruptcy could be a way out. For a free consultation with an experienced Indiana Chapter 7 bankruptcy attorney, contact Whitten & Whitten. We routinely handle matters throughout the Hoosier State.

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