Thompson Law Group, P.C.

Medical bills and credit cards are wiped out in Chapter 7

Medical bills continue to be a major problem for consumers nationwide, and in Pennsylvania. Although the Affordable Care Ace is supposed to implement caps on an individual's spending for medical expenses, most knowledgeable observers believe that the pressures of medical expenses on most Americans will continue. In particular, it is predicted that over half of all consumer bankruptcies will continue to reflect medical expenses as a major contributor to the debtor's problems. Fortunately, federal law provides for a resolution for most consumers: filing a Chapter 7 bankruptcy.

A Chapter 7 is the most popular consumer filing. Under federal bankruptcy law, an individual, or husband and wife joint filers, can wipe out generally all unsecured debt quickly and permanently, as part of the process of obtaining a "fresh start." Unsecured debt is such debt that is not associated with collateral. Thus, a Chapter 7 can eliminate not only all medical bills but also all credit card bills and any unsecured loans or other similar bills.

The idea that one who files a Chapter 7 will lose all of his or her property, or will never get credit again, is incorrect. In a Chapter 7, most debtors will be able to retain all of their basic belongings and furnishings due to exemptions provided for by law. This includes exemptions for cars and other items. Wild card exemptions under federal law make it feasible to exempt a certain amount of miscellaneous belongings or even bank deposits.

With respect to credit, the credit ratings of those in Pennsylvania and elsewhere who successfully complete a Chapter 7 can be improved over a relatively short period of time with some focused effort by the consumer. For example, in a Chapter 7 the debtor can keep a car and reaffirm the loan payments. As the debtor continues to pay the car payments after the bankruptcy is completed, these payments are reported and serve to increase one's credit rating. There are several other proper methods for rebuilding one's credit record.

Source: The Washington Post, "Why your fear of medical debt is entirely justified", Jason Millman, Sept. 4, 2014

No Comments

Leave a comment
Comment Information

Contact The Firm

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

email us for a response

Warrendale Office
Main Office
125 Warrendale-Bayne Road
Suite 200
Warrendale, PA 15086

Phone: 724-799-8404
Warrendale Law Office Map

Greensburg Office
101 North Main Street, Suite 104-A
Greenburg, PA 15601

Phone: 724-832-3500
Map & Directions

Canonsburg Office
Satellite Office
2400 Ansys Drive
Canonsburg, PA 15317

Phone: 724-799-8404
Map & Directions

Pittsburgh Office
Downtown Pittsburgh
500 Grant Street, Suite 2900
Pittsburgh, PA 15219

Phone: 412-823-8080
Map & Directions

Monroeville/Wilkins Township Office
Satellite Office
Building 1, 201 Penn Center Blvd., Suite 400
Pittsburgh, PA 15235

Phone: 412-823-8080
Map & Directions

Erie Office
1001 State Street
Suite 1400
Erie, PA 16501

Phone: 814-451-1125
Map & Directions