Jeffrey M. Rosenblum, P.C.
A Fresh Start

Chapter 7 offers way to settle unpaid medical debts

Unpaid medical bills will be the number one cause of personal bankruptcies in the United States, despite the implementation of the federal Affordable Care Act, according to a 2013 NerdWallet Health study. The ACA will increase the numbers of people who will have health insurance, but many medical costs are not covered by insurance policies.

Over the years, people all throughout the country, including New York, have not been able to pay off huge medical expenses, regardless of whether they have insurance. As a result, many of them have filed for bankruptcy to settle their debts. That is not likely to change anytime soon.

People who face overwhelming medical debts should first try to negotiate with the hospital or institution they owe, seek help from state or federal entities and pursue other alternatives to pay off the debts. If bankruptcy is inevitable, however, because of the amount of debt, the debtor should consider Chapter 7 bankruptcy.

Chapter 7 is probably the most common type of bankruptcy because it allows honest debtors to settle their debts through liquidation. The proceeds of liquidated property and assets are used to pay off debts. Not all property and assets are liquidated under Chapter 7, however. Certain properties are excluded from the process.

Some people regard filing for bankruptcy as shameful, but they may not understand that bankruptcy was created for the express purpose of allowing honest debtors to obtain a fresh financial start. Before filing for bankruptcy, an individual should consult a bankruptcy attorney to understand its pros and cons. Once someone has decided to file for bankruptcy, the attorney can represent that person in court.

An experience bankruptcy attorney can handle the legal aspects of the case, allowing the debtor to focus on paying off the debts.

Source: FOX Business, "Medical bankruptcies are still a problem, here's what to expect," Donna Fuscaldo, Feb. 18, 2014

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