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Month: December 2022
Medical Bills in Bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: December 27, 2022

Medical bills are one of the leading causes of bankruptcy. Many people file for bankruptcy due to medical bills, even if they have health insurance. The cost of healthcare in the US is very high and often leads to bankruptcy for many people. Medical expenses are usually discharged when a person files for bankruptcy.

Can you Discharge Medical Debt in Bankruptcy?

Medical debts can be discharged when you file for bankruptcy. But it is considered better to file for bankruptcy as a last resort. Filing for bankruptcy due to medical debt can be avoided through alternatives like suggesting and negotiating a payment plan with your healthcare provider.

This is done to avoid the claim going to collections where you do not have freedom over your funds. When you file for bankruptcy, the trustee ensures that all the creditors are repaid as soon as possible. Discharge of medical debt mostly depends on the amount of debt and the type of bankruptcy you filed for.

Medical bills are considered to be unsecured nonpriority debts in bankruptcy and can be discharged easily. In the case of chapter 7 bankruptcy, the trustee sells all your assets to repay creditors. At the end of that process, the medical bill is usually discharged even if you didn’t raise any funds to pay the healthcare provider.

However, there are downsides to filing Chapter 7 bankruptcy because the trustee has the authority to sell your property. Losing property can lead to losing your home or other land you may own. Hence chapter 7 bankruptcy is only for those who are critically low on funds.

In the case of chapter 13 bankruptcy, you may have to repay medical bills over the course of time from your income. This helps build a good relationship with your healthcare provider because you are at least repaying some of the medical bills.

If you are only facing medical debt, filing for bankruptcy is not the best option for you. Alternatives for avoiding bankruptcy filing include debt management plans, consolidating your debt, raising money, negotiating with the health provider, etc.

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Non-Dischargeable Debts in Bankruptcy

On Behalf of O’Brien Law Firm, LLC

Posted on: December 12, 2022

Non-dischargeable debts are those which are not ruled out when you file for bankruptcy proceedings. Often when a person files bankruptcy in court, many debts are discharged, and the person is no longer obligated to pay those debts. However, some debts need the creditor to challenge your discharge during bankruptcy to make it completely non-dischargeable.

The process usually includes the court making the decision after listening to both parties, i.e., the person filing for bankruptcy and the creditor. If the court disagrees with the creditor, your debt can be discharged.

Types of Non-Dischargeable Debts

There are many conditions under which your debts are non-dischargeable after filing for bankruptcy. This includes debts due to fraudulent acts, debts from marital settlement or divorce decrees, debts from embezzlement, a breach of fiduciary responsibility, larceny, or debts from willful or malicious acts to another person.

Most of the non-dischargeable debts arise from acts of fraud or unlawful practices. Other types of non-dischargeable debts include payment owed for personal injury to a person by the debtor.

Moreover, creditors have the right to object to the discharge of debts. If the court agrees with the creditor, the debts become non-dischargeable. These include purchases of luxury items made by the debtor that were acquired within 90 days of filing for bankruptcy. However, the debtor can discharge these debts by assuring the court that they will repay the creditor and that the purchases were not luxury items.

Other situations in which the debts become non-dischargeable are when the debtor does not have proof or record of their finances and property settlements to show to the creditor. The court declares the debts incurred from creditors non-dischargeable when you cannot account for your missing assets due to a lack of records.

Furthermore, debts can also become non-dischargeable if you file for bankruptcy too often. You cannot get discharges on debts if you file for bankruptcy within eight years after you filed your first bankruptcy case. Your previous bankruptcy filing can serve as grounds for your latest debts to be discharged or not. This depends on the type of bankruptcy and the settlements of your last bankruptcy.

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