Massachusetts Bankruptcy Law: How to Address Medical Expenses

Massachusetts bankruptcy law provides individuals struggling with overwhelming debt the opportunity to regain financial stability. Among the various forms of debt that can weigh heavily on individuals, medical expenses are often a significant contributor. Understanding the interplay between bankruptcy and medical debt in Massachusetts is crucial for anyone considering bankruptcy as a means to cope with their financial challenges.

In Massachusetts, medical debt can accumulate quickly due to high healthcare costs, even for those with insurance. When medical expenses surpass a person's ability to pay, they may find themselves facing bankruptcy. Filing for bankruptcy can be a viable solution to eliminate or restructure these debts.

There are two primary types of bankruptcy available for individuals in Massachusetts: Chapter 7 and Chapter 13. Chapter 7 bankruptcy allows for the discharge of most unsecured debts, including medical bills, while Chapter 13 enables individuals to create a repayment plan to settle debts over a three to five-year period.

Chapter 7 Bankruptcy and Medical Expenses

Chapter 7 bankruptcy is often favored by individuals overwhelmed by unmanageable debt. In this process, a court-appointed trustee assesses the debtor's assets and decides what can be liquidated to pay off creditors. Importantly, Massachusetts has exemptions that protect certain assets, which may include a portion of equity in a home, vehicles, and personal belongings.

When dealing with medical debts, many individuals find that filing Chapter 7 effectively discharges these obligations, allowing them to start fresh without the burden of unpaid medical bills. However, it's essential to note that not all debts can be discharged. For example, student loans and certain tax debts are typically non-dischargeable.

Chapter 13 Bankruptcy and Medical Expenses

For those with a stable income who wish to retain their assets, Chapter 13 bankruptcy offers an alternative solution. Under this provision, individuals create a repayment plan based on their income and family size, allowing them to pay off debts over time. Medical debts can be included in this repayment plan, enabling individuals to manage payments while protecting their assets from liquidation.

One of the significant advantages of Chapter 13 is the ability to halt collection actions, including lawsuits and garnishments, providing immediate relief to debtors facing creditor harassment due to medical bills. Additionally, individuals can work towards eliminating a portion of their medical debt while maintaining some of their assets.

How to Navigate Bankruptcy in Massachusetts

Addressing medical expenses through bankruptcy is not a decision to be taken lightly. Potential filers should begin by consulting with a qualified bankruptcy attorney who understands Massachusetts bankruptcy law. An attorney can provide insights into whether Chapter 7 or Chapter 13 is the right choice based on individual circumstances and ensure that all eligible debts, including medical expenses, are properly accounted for in the bankruptcy filing.

Moreover, understanding the means test is crucial when filing for Chapter 7. This test assesses income levels based on household size and determines eligibility for bankruptcy. If income exceeds the state median, individuals may still have the option to file under Chapter 13.

Final Thoughts

Massachusetts bankruptcy law offers a pathway for individuals burdened by substantial medical expenses to gain financial relief. By filing under the appropriate chapter, individuals can manage or eliminate their medical debts while also working towards a more stable financial future. It is vital to seek legal advice and understand each step of the bankruptcy process to ensure a successful outcome.