Forty years ago or more, few people over retirement age ever filed for bankruptcy. Those people became adults in a time of depression and war, worked hard and saved their money. Now, medical bills force many older citizens to seek bankruptcy protection.
The Downside of Medical Technology
The incredible advances in medicine are partly to blame. This wonderful technology allows people to live longer and to survive medical problems that once would have been fatal. The downside to this is the cost. Older people are the primary consumers of medical services.
Most people filing for bankruptcy had some type of health insurance. However, higher co-pays and declining coverage leave people exposed to higher out-of-pocket costs. If someone has no health insurance, one hospital stay can be catastrophic. For example, a short hospital stay for gall bladder surgery could cost over $40,000.
Bankruptcy as an Option
Depending on the circumstances, medical bills can be eliminated with either chapter 7 or chapter 13 bankruptcy. As soon as the bankruptcy is filed, creditors are required to stop calling or sending collection letters.
Chapter 7
Chapter 7 is designed to liquidate unsecured debts, such as medical bills. In order to qualify, debtors must pass a means test, showing that there is little disposable income. The means test might seem self-explanatory, but many make errors when filling it out. It is best to consult a debt relief lawyer.
A trustee who will review the documents and sell non-exempt property to repay creditors will be appointed for the case. Frequently, all of the debtor’s property is considered exempt. The bankruptcy is usually complete in five months or less.
Chapter 13
Chapter 13 reorganizes a debtor’s finances by establishing a three to five year repayment plan for creditors. People who earn too much for chapter 7 or who own homes and wish to keep them would file chapter 13. If mortgage payments have fallen behind, chapter 13 allows the opportunity to catch up on the payments.
In order to qualify for chapter 13, a debtor must have sufficient income to repay some portion of the debt. All assets are retained. Anyone drowning under medical bills should talk to a debt relief lawyer in St. Louis, MO. Sean C. Paul is a bankruptcy attorney who is focused on providing quality legal services to his clients. Visit his website at Stlbankruptcyfirm.com to learn more.
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