Medical expenses can pile up quickly and become overwhelming, especially if you face a major illness or injury. In New Jersey, if you struggle with substantial medical debt, filing for bankruptcy might be a solution to consider. Both Chapter 7 and Chapter 13 bankruptcy offer legal ways to eliminate or reduce your debts, giving you a fresh financial start.
In New Jersey, you can discharge many types of debt through bankruptcy, including medical expenses.
Chapter 7 bankruptcy
Chapter 7 bankruptcy is often the preferred choice for those with overwhelming medical debt and limited income. To qualify, you must pass the means test, which compares your income to the median income in New Jersey. If you qualify, the court appoints a trustee to manage your case. The trustee sells any non-exempt assets to pay your creditors. Once you complete the process, courts will discharge most of your medical debt and other unsecured debts.
Chapter 13 bankruptcy
Chapter 13 bankruptcy is suitable for those who have a regular income and can afford to pay back a portion of their debts. Under Chapter 13, you propose a repayment plan to the court. This plan lasts three to five years, during which you make monthly payments to a trustee. At the end of the repayment period, courts will discharge any remaining unsecured debt, including medical debt.
Benefits and considerations
Filing for bankruptcy can provide relief from medical debt, but it also has long-term consequences for your credit score and financial future. Weigh the benefits of eliminating your medical debt against the potential impact on your credit. Bankruptcy stays on your credit report for up to ten years, which can make obtaining credit or loans more difficult.
Taking control of your financial future
By understanding the process of writing off medical expenses in bankruptcy, you can make an informed decision about whether this option is right for you. In New Jersey, bankruptcy can be a powerful tool to help you regain control of your financial situation and move forward with a clean slate.
