If your debt is too high but pride prevents you from seeking protection under Chapter 7 bankruptcy, then Chapter 13 may be the option for you. While chapter 7 allows you to start with a clean slate, chapter 13 is a redemption plan overseen by the court. If you fall into an income category or are currently unemployed, the court will also allow you to pay only a portion of the total medical debt. Most individuals who file Chapter 13 have incomes much higher than what Chapter 7 allows.
The repayment period after Chapter 13 bankruptcy is around 3-5 years. One benefit is that you can keep your non-exempt property that would have been sold to pay creditors under Chapter 7 proceedings. People who apply for chapter 13 have something in common:
- They want to pay their medical bills, but their current situation doesn’t allow them.
- They are behind on mortgage or car loan payments because of their medical bills.
- You already filed for Chapter 7 bankruptcy last year or seven years ago. You can only renew the Chapter 7 application after eight years.
There are other requirements for filing Chapter 13 bankruptcy bills, but an attorney can better explain the limitations and benefits of the process to you. For example, you can’t file Chapter 13 if your debt was paid off more than two years ago. Also, filing bankruptcy bills for medical bills does not automatically eliminate tax, alimony, child or spousal support, student loans, or criminal and civil liability.
It’s important that you consider all of your options and think about the pros and cons of a chapter 13 or chapter 7 bankruptcy. Do not make a hasty decision without first consulting your family, friends, co-workers and attorney. Remember that you will ultimately have to deal with the consequences of your actions, so the decision of whether or not to file for bankruptcy is ultimately yours, no matter how valuable their advice would be.
Thanks to M. Baylor