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Understanding medical debt and bankruptcy

Medical bills are notoriously expensive and difficult to pay off. One health incident could cost thousands and thousands of dollars, and this is true even for people who have insurance. With the potential of such expenses looming, it may seem like your worst nightmare when that possibility becomes reality.

You are hardly alone, however, when it comes to facing large debts that are the result of medical expenses. According to CNBC, in fact, medical bills are the leading cause of bankruptcies in the United States. There are a few things everybody seeking relief from such debt should be aware of. If you are considering medical bankruptcy, the following three facts are important to take into consideration.

Passing the means test

Debtors who are interested in filing for Chapter 7 bankruptcy will typically have to pass the means test prior to doing so. This entails accounting for your expenses, the size of your family, your income and the amount of your debts. If you are filing for medical bankruptcy, though, you may not have to pass the test by its usual terms -- there may be other options available.

Medical debt is unsecured

Medical debt is one type of unsecured debt, which means that there is no attached collateral that can be repossessed by creditors. It also means that the debt may be eligible for discharge under Chapter 7 bankruptcy. Even if you do not qualify for Chapter 7, you may be able to get out from under your debt by repaying a portion of the debt by filing Chapter 13 bankruptcy instead.

Legal representation can help

No matter what kind of debts you are facing or what kind of bankruptcy you are considering, it can be challenging to negotiate with your creditors and determine which options are best for your situation. A legal representative can handle these matters for you and help you find the path to relief from medical debt that is best suited to your needs.

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