According to CNN Health, 62 percent of the U. S. bankruptcies in 2007 involved medical bills. Just six years earlier, the percentage was 46 percent. If you need to file bankruptcy for medical bills, you are not alone. Getting started with the process requires making some decisions, including choosing the chapter to file and deciding whether to file on your own behalf or with the help of an attorney. Although the process involves significant amounts of paperwork, bankruptcy does provide a solution if you have excessive medical debt.
Find a bankruptcy attorney. While you can file bankruptcy without legal representation, doing so can be difficult. According to Bankrate.com, if you do not fill out your paperwork accurately, the court could dismiss your case, which means you would have to start all over again. If attorney's fees are a problem, some lawyers do offer discounts or pro bono (free) services for low-income filers.
Decide which chapter to file. Consumers usually choose between Chapter 7 and Chapter 13 bankruptcy. Chapter 7, also known as liquidation, means the filer's assets are taken to pay their creditors. Some assets are exempt so you may be able to keep your car, your home, and personal belongings. Under Chapter 13, the courts set a repayment plan for up to five years. You pay the amount specified in that plan each month to the court, which distributes it to the creditors. If you want to file Chapter 7, you must also pass a means test so the courts can be sure you don't earn enough to repay your debts.
Complete paperwork. Before filing for bankruptcy for medical bills, you must complete paperwork provided by your attorney. You must provide information about your sources of income, all of your secured and unsecured debt, your assets and your expenses. Any debt not listed in the paperwork may not be included in the bankruptcy.
Complete credit counseling. Under a 2005 change in bankruptcy law, all bankruptcy filers must complete a credit counseling course approved by the U. S. government. This course must be completed during the six months prior to your filing for bankruptcy. Filers must pay the fees for completing these courses, but if your income is less than 150 percent of the poverty level the fees are waived. Your attorney can help you find an approved service or you can find a list at the U. S. Trustee Program's website.
Finish requirements. To file your bankruptcy case, you will need to turn in a number of items to your attorney. You will need the certificate showing you passed the credit counseling program, your W-2s or other earnings statement for the last two months, copies of your tax returns (the most recent for Chapter 7 filers and the last four for Chapter 13 filers), and the filing fee. According to the United States Courts website, the filing fees as of April 2010 are $299 and $274 for Chapter 7 and 13, respectively. Your attorney will also need to make a copy of your photo identification.
- Realize bankruptcy will not eliminate all of your debts. While Chapter 7 or Chapter 13 can help with medical bills, debt from student loans, child support or court-ordered fines will not be included.
- Make copies of the paperwork before submitting to your attorney. If anything you submitted gets lost, you won't have to fill it out all over again.
- Shop around for an attorney to handle your case. Attorney fees vary considerably. Some bankruptcy lawyers even offer payment plans for filers.
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