Massachusetts Bankruptcy Law: Discharging Medical Debts

Massachusetts bankruptcy law provides a viable option for individuals struggling with overwhelming medical debts. When significant healthcare expenses exceed your financial capability, filing for bankruptcy can help clear these debts and pave the way for a fresh start.

Under the U.S. Bankruptcy Code, individuals have the option to file either Chapter 7 or Chapter 13 bankruptcy. Each chapter has distinct processes and implications for discharging debts, including medical bills. Understanding how these laws work in Massachusetts is crucial for making informed decisions.

Chapter 7 Bankruptcy: Quick Relief

Chapter 7 bankruptcy, often referred to as "liquidation bankruptcy," is designed for individuals with limited income who cannot repay their debts. In Massachusetts, this type of bankruptcy allows individuals to discharge most unsecured debts, which commonly includes medical bills.

To qualify for Chapter 7, debtors must pass the means test, which compares their income to the state's median. If the debtor's income is below this threshold, they may proceed with the Chapter 7 filing.

Once the bankruptcy case is filed, an automatic stay goes into effect, halting all collection actions from creditors. This includes aggressive medical debt collectors, allowing individuals to move forward without the burden of ongoing harassment.

Chapter 13 Bankruptcy: Reorganizing Debt

For individuals who earn too much to qualify for Chapter 7, Chapter 13 bankruptcy offers an alternative. This plan involves reorganizing and repaying debts over a period of three to five years. Although medical debts are not automatically discharged in Chapter 13, they can be included in the repayment plan alongside other unsecured debts.

By filing for Chapter 13, debtors can catch up on overdue payments on other debts while still making manageable monthly payments to creditors, including medical providers. Upon successful completion of the repayment plan, any remaining unsecured debts, including medical bills, may be discharged.

Discharging Medical Debts in Massachusetts

Medical debts are generally classified as unsecured debts, meaning they are not tied to any collateral. In both Chapter 7 and Chapter 13 bankruptcies, these debts are eligible for discharge, relieving individuals of the financial burden associated with unpaid medical bills.

However, it is important to note that specific factors may affect the dischargeability of certain medical debts. For instance, if a debt was incurred through fraud or is related to complications regarding insurance claims, it might not be eligible for discharge. Debtors should consult with a qualified bankruptcy attorney to evaluate their unique circumstances.

Impact on Credit Score

While bankruptcy can provide much-needed relief from medical debts, it is essential to understand its potential impact on credit scores. In Massachusetts, a bankruptcy filing will remain on your credit report for seven to ten years, depending on the chapter filed. This may hinder your ability to secure new credit or loans during this period.

However, many individuals experiencing severe medical debts find that the long-term benefits of financial relief and rebuilding credit far outweigh the temporary impacts on their credit scores. By addressing these debts through bankruptcy, individuals can focus on recovery and rebuilding their financial stability.

Seeking Legal Assistance

Navigating bankruptcy laws can be complex, and working with a knowledgeable attorney specializing in Massachusetts bankruptcy law is highly recommended. A qualified attorney can guide you through the process, help you understand your rights and options, and protect your interests while navigating the bankruptcy system.

In conclusion, Massachusetts bankruptcy law offers individuals burdened by medical debts a lifeline to regain financial freedom. Whether you choose Chapter 7 for quick relief or Chapter 13 to reorganize your debts, bankruptcy can be a crucial step in overcoming the financial strain of medical expenses.