When people think about bankruptcy, people often associate it with expensive cars, houses, and other products that are pure luxuries. They often forget about bankruptcy because of overwhelming medical bills, which is quite common in the US.
If you’re considering filing for bankruptcy because of medical expenses, read on to learn the two main types of bankruptcies, and how they’re different.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy totally takes away an individual’s debts. They no longer have to pay the debts back and are able to go about their normal lives. The downside to this kind of bankruptcy is that is stays on a person’s record for 10 full years, an entire decade.
Chapter 13 Bankruptcy
This kind of bankruptcy reimburses the lenders whose debts caused the individual to go bankrupt. All this is done under the court of law, and the filer is protected from being taken to court and sued by the individual they owe debts to. It promises to protect all of their belongings, such as the home, car, etc. This kind of bankruptcy only lasts for 7 years on someone’s credit report.
Other Options
If you’re considering bankruptcy because of medical bills first talk with the individual (or company) you owe the debt(s) to. More often than not a reasonable agreement can be met, preventing bankruptcy. No matter how bad things may seem to get there will almost always be financial assistance, and bankruptcy should be a last resort.
Consider all possible options before making the decision to file for bankruptcy, which will destroy your credit for many years.
There are many reasons people find themselves dealing with medical bankruptcy. The most important thing when faced with this dilemma is understanding you have options, and considering all of them.