Medical Debt
Bankruptcy is a way for people who are completely overwhelmed with debt to have a way out. In most cases, these people have no fault for the situation they are in. No example is better of this situation than the Number One cause of bankruptcy in the United States: medical debt.
You do not choose to become sick or injured, but you are responsible for the bills that follow, which can range up to a hundred thousand dollars or more. Medical debt is the lead factor in more than a quarter of bankruptcies in the United States.
Medical Bills and Bankruptcy in Cincinnati
If you are overwhelmed with medical bills and can no longer make ends meet, bankruptcy may be a way out for you. Cincinnati bankruptcy lawyer Eric Steiden helps Ohio and Kentucky residents who are inundated with medical debt get a clean start. Though medical debt often makes up the largest share of a person’s debt, it can be one of the easiest to discharge in bankruptcy.
With more than 30 years of experience and more than 6,000 case hearings, the team at Steiden Law Offices can help you get relief from bill collectors after an injury or illness leaves you in severe debt. Call today to set up a free consultation.
Steiden Law Offices serves clients in Hamilton County, Kenton County and Boone County, with locations in Cincinnati, Covington and Florence.
Medical Debt Issues in Ohio Bankruptcy
Medical Debt Has Low Priority in Chapter 7 Bankruptcy
When you enter into a Chapter 7 bankruptcy, the most common type of bankruptcy, a certain amount of property is determined to be exempt. Exempt property will not be considered for liquidation. For many people, everything they own is exempt and, therefore, nothing is liquidated.
Non-exempt property is liquidated, or sold. The proceeds are used to pay off the debts. The proceeds are almost never enough to actually pay the debts off (hence the bankruptcy filing). The debts are paid off in a certain order.
Priority debts, which usually cannot be discharged, are paid first. These are tax bills, child support payments, and other debt you owe that have a legal basis for their priority. Secured debts are next. These are debts that have some sort of collateral, for example, if there is a lien against property, like a mortgage or a car not.
Finally, unsecured debts are last. Unsecured debts are debts for which there is no collateral. In most cases, all unsecured debt that does not meet some legal exemption, like student loans, is discharged.
Medical debt usually falls under this last category. Hospital bills, doctor bills and other kind of medical debt are very rarely tied to any sort of collateral. Therefore, in most bankruptcy cases, medical debt is completely discharged. Discharge means that the debt is basically erased, and the creditor can no longer come after you.
Medical Debt in a Chapter 13 Bankruptcy
Some people prefer a Chapter 13 bankruptcy, also called a “reorganization.” Ohio and Kentucky debtors are eligible for a Chapter 13 if their total unsecured debts, including medical debt, are not more than $360,470.
In a Chapter 13 bankruptcy, you present a plan to pay off your creditors as much as you can in three to five years. It is ideal for people who are overwhelmed with indebtedness but are still making an income, want to avoid liquidation and may be able to pay off some or all debts. The creditors must receive at least as much as they would receive under any other form of bankruptcy.
Medical bills alone can easily exceed $360,000, but your circumstances may allow for a Chapter 13 bankruptcy. Your bankruptcy lawyer can review your situation and help you make that determination.
Representing Ohioans and Kentuckians Facing Medical Debt
If you have significant medical debt, bankruptcy can be a source of relief for you. Cincinnati bankruptcy lawyer Eric Steiden has more than 30 years experience helping people in Southern Ohio and Northern Kentucky make it through bankruptcy. He can assist you. Call Steiden Law Offices today at to set up a free consultation.
