Facing Medical Debt in Milwaukee? Bankruptcy Might Offer Solutions
Millions of Americans struggle with crippling medical debt, and Wisconsinites are no exception. Here in Milwaukee, that burden can feel all the more overwhelming. But there might be a light at the end of the tunnel, and it’s bankruptcy and medical debt relief.
This is a sensitive topic, so we’ll approach it with understanding and honesty. We will simplify the complexities of bankruptcy and provide needed knowledge. This article aims to help you make informed decisions about your financial future.
If you are drowning in medical bills or curious about bankruptcy as an option, read on. Remember, you’re not alone in this fight. Let’s break down the barriers and find a path toward financial freedom.
- Bankruptcy offers relief for those struggling with massive debt (individuals & businesses). It is not a quick fix and has significant legal and financial consequences.
- Chapter 7 bankruptcy (debt elimination) offers a fresh start. Chapter 13 (repayment plan) allows you to restructure debt over time. Each bankruptcy chapter has its advantages and disadvantages depending on your situation.
- Medical debt is part of both Chapter 7 and 13 filings, but not all types of medical debt are eligible for discharge.
- Chapter 7 eliminates all dischargeable medical debt with no limit if you pass an income test. Downside is you may lose some assets in the process.
- Chapter 13 combines medical and other debts into a repayment plan. Your income, expenses, and assets is the basis of that plan, which lasts for three to five years. Upon successful completion, Chapter 13 can discharge any remaining debt.
- Eligibility for both Chapter 7 and 13 have specific criteria. Those include income, assets, and debt amounts. Chapter 13 may have more debt limits for inclusion.
- Weigh the costs of bankruptcy before filing. It has potential harm to your credit score and affects your future lending options.
- Effective bankruptcy alternatives exist, such as debt negotiation with providers first. You can also use hospital assistance programs and seek financial counseling.
What is Bankruptcy?
Bankruptcy isn’t a magic wand, but it can be a lifeline for those drowning in debt. This legal process helps individuals and businesses with financial burdens to start over. Depending on the chapter chosen, you can chip away at your debt through a structured plan. In some cases, you can wipe it clean. Think of it as a reset button for a chance to rebuild your financial health.
Note that it’s not a one-size-fits-all solution. Different types of bankruptcy carry specific rules and consequences. Not all debts qualify for discharge, and your credit score will take a temporary hit. Remember, bankruptcy is a serious decision. But it can be a powerful tool for getting back on track and paving the way for a brighter financial future.
What is Medical Debt?
Some types of debt carry special priority status. That means bankruptcy cannot discharge them. Medical bills do not fall into this category.
In bankruptcy proceedings, medical bills are like credit cards. Both fall under general unsecured debts. This designation means that bankruptcy can drop medical bills.
The treatment of medical debt varies depending on the type of bankruptcy filed. Chapter 7 is the most prevalent while Chapter 13 presents a more intricate scenario.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy classifies debts into distinct categories. Those are secured debts, unsecured debts, priority debts, and nonpriority unsecured debts. Among these, medical debts fall under nonpriority unsecured debts.
Chapter 7 bankruptcy discharges most or all your debts. If you qualify for Chapter 7, it will wipe out all medical bills and other unsecured debts. There is no predefined limit to the amount of medical debt that Chapter 7 can cut.
Eligibility for this bankruptcy type must pass a means test to show low income. Chapter 7 can discharge medical bills paid through a credit card and other credit card debt. Filing for Chapter 7 ensures the complete relief of medical debt.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy consolidates all your debts. You repay them through a structured payment plan. Medical debts are part of this consolidation. Your income, expenses, and assets determine the amount you must repay under Chapter 13. You might not be eligible for Chapter 13 if your medical and other debts go beyond debt limits.
Unlike Chapter 7, Chapter 13 bankruptcy differs on how it handles medical debt. You must repay a percentage of your unsecured debts throughout your repayment plan. This specific percentage comes from your disposable income. It also comes from the amount your unsecured creditors would have received if you filed for Chapter 7 bankruptcy.
Creditors under Chapter 13 receive some of the total amount you are paying toward your debts. Your remaining medical debt and other unsecured debts are discharged when you finish your repayment plan.
What Are The Things I Should Know Before Filing For Bankruptcy?
Grasp the following key aspects before initiating the bankruptcy for medical debt relief:
- Costs: In Wisconsin, as of 2022, the filing fee for Chapter 7 bankruptcy is $335. Chapter 13 bankruptcy incurs a $310 fee.
- Bankruptcy Impact on Credit Report: Bankruptcy will affect your credit score. It remains on your credit history report from seven to 10 years and depends on the bankruptcy type.
- Lending Risk: Filing for bankruptcy might increase your lending risk in the eyes of lenders. Securing financing for significant purchases, such as homes and car loans, becomes challenging.
Filing for bankruptcy is stressful, frustrating, and exhausting. Comprehensive understanding of information before deciding to file is essential.
What are the Alternative Solutions for Managing Medical Debt?
There are potential avenues to address medical bills without resorting to bankruptcy. These options are viable to those who have favorable credit history.
Engage in Negotiations with the Medical Provider
Start the resolution process by settling all insurance payment matters. Explore negotiating with the creditor if you have exhausted all available insurance coverage. A medical provider can waive the bill’s percentage on uninsured medical expenses. Most hospitals and healthcare providers offer bill waivers or discounts for uninsured patients.
Inquire About Assistance Programs
Many hospitals administer assistance programs. If you meet the criteria, they can provide complimentary or reduced-cost hospital care based on your income level. For example, certain states have the Hospital Care Assurance Program (HCAP). That covers expenses for essential medical services. Contact your hospital’s financial aid counselor for more information.
Contact Our Milwaukee Legal Team Today!
In the context of Milwaukee, Wisconsin, the implications of medical debt in bankruptcy are crucial. Filing for Chapter 7 or 13 bankruptcy needs careful consideration and legal guidance.
Miller & Miller Law, LLC, is here to assist you with bankruptcy and medical debt relief. Our team is well-versed in bankruptcy laws specific to Milwaukee, Wisconsin. We will assist you to qualify for Chapter 7 and represent you in the meeting with creditors. We can also help you on shifting from Chapter 7 to Chapter 13 if you did not file correctly.
Our bankruptcy attorneys will assist in completing forms and paperwork on time. Missed deadlines can result in delays or case dismissal, which you do not want to happen.
Take the first step toward financial relief by reaching out to us for a free case evaluation. Your journey to financial recovery begins with understanding your choices. Miller & Miller Law, LLC is here to help you navigate that path. Contact us today for the support you need during these challenging times.