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Potential changes to bankruptcy affected by medical debt

Medical debt and associated expenses or loss of income is a primary cause of serious consumer debt in Oregon and around the country. Many people end up choosing to file either a Chapter 13 or a Chapter 7 bankruptcy due to the effects of such situations. When seeking debt relief, people have many concerns including the need to stop creditor harassment, stop wage garnishment and to achieve a new start for a better financial future.

Two United States senators have recently introduced a new bill titled the Medical Bankruptcy Fairness Act of 2014. If passed, it would dramatically change some of the parameters for people filing for Chapter 7 because of health issues. Some of the amendments include the ability to include student loan debt in a bankruptcy. It would also allow consumers to keep up to $250,000 worth of a home’s value, helping to guard against the loss of homes for many people. Eliminating some procedural steps is also included in the bill as an effort to make a Chapter 7 bankruptcy simpler for those that need the help.

Many people who incur serious personal debt due to medical issues are actually among the insured. Debt can amass not simply from medical expenses such as co-pays but also from the loss of income. This can be in the form of lost wages if the ill person can no longer work or if one person must take time off of work in order to care for another family member. Loss of child support or alimony from a person affected by medical issues can also affect personal debt levels.

Whether or not the bill will pass remains to be seen. In the meantime, anyone who is struggling with debt may be able to get help from an attorney.

Source:, “ Senators Introduce Measure to Help Families Struggling with Medical Debt,” June 16, 2014

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