Unsecured debt is medical debt.
When filing for Chapter 7 bankruptcy, your debts are either classified as secured or unsecured. Common examples of secured debts are mortgages and auto loans. A creditor may take action to recoup losses incurred due to a defaulted debt. Unsecured obligations, on the other hand, indicate that the creditor has no property to use as collateral for the debt. This second category represents medical debt. Consequently, medical bills can be discharged through bankruptcy.
Unsecured debts are further classified as either priority or non-priority. Priority debts, which include taxes and child support payments, are typically not dischargeable in bankruptcy. Non-priority debts are relegated to the end of a Chapter 7 repayment plan, as they receive no such special treatment. In this last category of non-priority unsecured debt, medical expenses are included.
In addition, there is no limit on the quantity of medical debt that can be discharged via Chapter 7 bankruptcy. This means that regardless of how exorbitant your hospital bills have become, registering for bankruptcy can wipe the slate clean. This makes bankruptcy a financially prudent option for many individuals who are faced with insurmountable medical expenses.
To receive a discharge of your unsecured debts, you must qualify for Chapter 7 bankruptcy. Typically, this entails passing the means test, in which your income and expenses are compared to determine your ability to pay back your debts. If you qualify for bankruptcy by passing the means test, you should consult with a bankruptcy attorney to determine if filing for bankruptcy is your best option for eliminating debt.
Not all debts are the same.
Remember that bankruptcy is a complicated issue and that each case is unique. For instance, if you have a substantial quantity of non-exempt assets, Chapter 7 bankruptcy may not be your best option, despite the fact that it would eliminate your medical debts. Do not presume you can file for bankruptcy on your own and that all of your debts will be eliminated. Always consult a qualified bankruptcy attorney, who will advise you on the best course of action for your financial future, be it credit counseling, debt management, or bankruptcy.""
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