How Do I File For Medical Bankruptcy?

Despite increasing public awareness of potentially exorbitant healthcare costs, as of 2013 the United States still does not offer an official medical bankruptcy. Though in some areas of the country health reasons are a major cause of personal bankruptcy, federal laws do not hold any provisions for people who have overwhelming medical debt. In order to receive a legal discharge from high healthcare bills, you must declare bankruptcy on your other obligations including credit cards and personal loans.

Unemployed or under-employed people, with or without the presence of serious health problems, are usually eligible for debt relief under Chapter 7. To economically qualify for Chapter 7, you generally must earn less than your state's annual median income level. For example, the figure for a single Tennessee resident is $39,891, while a family of four living in Mississippi must bring in no more than $59,248 annually in order for the head of household to qualify for this type of bankruptcy.

If you earn more money than the state guidelines - regardless of your medical situation - you must either prove your inability to partially repay all of your bills or file for a repayment plan under Chapter 13. It takes three to five years to complete a partial debt repayment plan under Chapter 13. Medical bills are usually not assigned "priority" by the courts, but it is possible you will need to pay a small part of these obligations. However, bankruptcy court personnel will ensure the payments do not exceed your financial means.

Unless you have serious and permanent medical problems, you cannot discharge or reduce government-issued student loans in Chapter 7 or Chapter 13. A judge may approve an exception, but you generally must be seriously disabled and in a dire financial situation.

No matter what your situation, you cannot include child support, alimony, court fines, or recent tax bills in a bankruptcy case. If you were sued due to illegal acts such as theft or drunken driving, you cannot include those debts in Chapter 7 or Chapter 13.

You must complete two credit counseling sessions to file a case, regardless of the reason for your financial insolvency. One session must be completed prior to declaring bankruptcy; the second session must be finished before a judge will finalize your debt relief request. The sessions can be completed over the phone, online or in-person. Always remember that the fact that you filed bankruptcy will damage your credit rating for 7 to 10 years, so do not pursue this option lightly.

Credit Score Resources