Medical debt can strike quickly and suddenly become overwhelming. Unexpected medical expenses can pile up, leaving you struggling to keep up with payments.
If you are facing significant medical debt, Chapter 13 bankruptcy offers a solution that can provide relief and help you regain financial stability.
Understanding Chapter 13 bankruptcy
Chapter 13 bankruptcy allows individuals with a steady income to reorganize their debt. Unlike Chapter 7 bankruptcy, which involves liquidating assets, Chapter 13 focuses on creating a manageable repayment plan. This plan typically lasts three to five years, during which time you will make regular payments to a bankruptcy trustee. The trustee then distributes these payments to creditors.
Protecting your important assets
One of the key benefits of Chapter 13 bankruptcy is the ability to protect assets, such as a home or car, from seizure. This protection can be particularly valuable when dealing with medical debt, as medical emergencies can lead to large bills and the potential for losing valuable possessions. Chapter 13 allows you to keep your property while working to pay off the debt over time.
Discharging certain debts
Once you complete the repayment plan, any remaining unsecured debt may become discharged. This means you are no longer responsible for paying off the remaining balance. This discharge can provide significant relief, enabling you to move forward without the burden of lingering medical debt.
Receiving a stay on debt collection
Filing for Chapter 13 bankruptcy also triggers an “automatic stay,” which prevents creditors from pursuing collection efforts. This can provide immediate relief from the stress of constant calls, letters and legal actions related to medical debt.
Statistics show that the median medical debt in Oregon’s most populous counties ranges from $1,723 to $3,664. Chapter 13 bankruptcy offers a well-structured way to address and overcome this potentially overwhelming medical debt.
