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Filing Washington Bankruptcy for Medical Debt

March 19th, 2018 Bankruptcy Law Blog

Medical emergencies often strike without warning. As a result, many people are left financially unprepared to deal with the high cost of treatment. Massive debts can occur from hospital visits, surgeries, rehabilitation, therapy, in and outpatient care and more.

Medical debt in the United States has risen over the years to unprecedented levels. The Consumer Financial Protection Bureau reports an estimated 42.9 million Americans have outstanding medical debt. Americans spend the most per-person each year on healthcare than any other country in the world, with an average of $9,237 per-person.

Medical stethoscope with paperwork

Medical bills can run into the tens or even hundreds of thousands of dollars, and your insurance will likely only cover a fraction of it. While more Americans have access to health insurance due to the Affordable Care Act, it only mandates coverage for certain services. This includes emergency services, preventative exams and maternity care. However, it doesn’t cover insurance deductibles or out-of-network healthcare. In some cases, it can leave you paying for 20 percent to 40 percent of a bill.

Filing Bankruptcy as a Solution

One of the most common reasons people file for Chapter 7 or 13 is due to their crippling medical debt. Hospitals or medical institutions often only give you a few months grace period before they send the debt to a collection agency. For those still dealing with the fallout from the medical emergency, the harassing phone calls from the debt collectors can add unwanted stress and aggravation into an already difficult situation.

The good news is that if you suffer from crippling medical debt, it’s possible to eliminate it through filing for Washington bankruptcy. However, there are a few conditions that apply:

Chapter 7 

With Washington Chapter 7, it allows you to discharge unsecured medical and credit card debt. In order to file for Chapter 7, you must first be able to financially qualify for it. This means that your income must pass a means test. If your monthly household income is lower than Washington’s median income for your household size, you will likely pass the means test.

Chapter 13 

Chapter 13 bankruptcy is an alternative solution for those who don’t qualify for Chapter 7. This requires you to pay back a portion of your medical debt through a payment plan. This option allows filers to keep personal property.

If you have a house, car, or other property, the bankruptcy trustee cannot take it and resell it to pay your debts. Under Chapter 13, you are given a three or five-year repayment plan and at the end of that time period the remaining medical debt is discharged by the court.

The situation and finances of each person who files for Chapter 13 are slightly different. It’s hard to say how much you will be required to pay back until you speak to a qualified and experienced Tacoma bankruptcy attorney.

Medical Debt Bankruptcy Attorney in Tacoma, WA

If you’re suffering from crippling medical debt, you’re not alone. You owe it to yourself and your family to take that first step in dealing with the situation. The sooner you act, the sooner you will find relief from medical debt.

At the Law Offices of David Smith, we are here to help those with medical debt find a workable solution. Filing Washington bankruptcy can provide the first step towards financial freedom. If you’re facing medical debt, schedule a free consultation with our Tacoma bankruptcy attorneys today. We will carefully analyze your specific financial situation and provide our recommendation for next steps.