In this weak economy, it doesn’t help that the cost of healthcare continues to skyrocket. We can’t completely avoid getting sick. The medical bills, consultations, laboratory fees, drugs, and cost of therapies do add up. Even health insurance doesn’t seem to be enough to cover medical debt anymore. And when a person’s medical debt becomes so overwhelming it’s impossible to pay, that person may want to consider for filing for medical bankruptcy.

When does a person qualify for Medical Bankruptcy?

There are two types of bankruptcy: bankruptcy under Chapter 7 and Chapter 13. Medical bankruptcy is often filed under Chapter 7, more commonly referred to as straight bankruptcy. Under this chapter, all debts are being eliminated without having to pay them back paying them back depending on the filer’s situation. This is a great relief to those filers who are incapable of paying their debts.

There are certain conditions we have to consider upon filing medical bankruptcy. Upon filing on Chapter 7 there is a test wherein a filer must pass called the “Means Test”. This test helps the Bankruptcy Trustees and Judges resolve if someone is really qualified and eligible for Chapter 7 bankruptcy support.

This test is based on your state’s median salary. If your income is less than your state’s median salary for your family, then you are qualified under Chapter 7 without taking the Means Test. If your income is over the stated state’s median salary, then you are required to pass the Means Test I order to qualify under Chapter 7. On the other hand, if your income is too high compared on your state’s median salary and you failed the Means Test, you’ll have to file medical bankruptcy under Chapter 13.

Under Chapter 13, your debts will be reduced and you will continue to pay your debts on an installment basis. The creditors are required to accept the amount of money agreed upon bankruptcy. Upon filing bankruptcy under Chapter 13, the filer is must be employed and have a steady source of income.

How To File For Bankruptcy

Upon filing medical bankruptcy, it is mandatory to provide your federal income tax return in order to calculate your disposable income. You will also need to provide a list of all your creditors, not just your medical bills, but any unsecured debts that you have as well. Included in that list are your creditors their addresses, contact numbers, account number, and the amount you owed. You’ll also need to submit all your statements from all financial intuitions that you have accounts with.

In addition to these requirements, you’ll also need to file the necessary paperwork and forms. Forms used for filing medical bankruptcy may vary from state to state. These forms need to be completed upon application. Once you have all your documents and forms, you can deliver your petition and other necessary documents to the bankruptcy court clerk to file. After that, all you have to do is to wait for your bankruptcy case to reach the court.

Despite the stigma, filing medical bankruptcy can sometimes be the only the only alternative left. Be informed and contact your local bankruptcy for complete information on how to file for medical bankruptcy.