Can You File Bankruptcy on Medical Bills in Wisconsin?

Get Solutions for Eliminating Medical Debt

Clear medical debt by filing for Chapter 7 bankruptcy.

Yes, you can file for bankruptcy on medical bill debt by filing for Chapter 7 or Chapter 13 bankruptcy in Wisconsin. Filing bankruptcy for medical debt has become increasingly common as healthcare costs rise and many struggle with inadequate insurance coverage. This situation has led many people to search for methods to resolve their medical debts. In the greater Milwaukee area, residents often question how to resolve their medical debt and whether filing for bankruptcy might be a viable solution.

What is medical bankruptcy?

Medical bankruptcy is a form of debt relief for individuals overburdened with medical debt. 

In Wisconsin, if you file for Chapter 7 Bankruptcy, medical debt can be completely cleared.

Chapter 7 Bankruptcy classifies types of debts into 4 categories (secured debt, unsecured debt, priority debt and nonpriority unsecured debt).

Filing for medical bankruptcy would fall into the category of nonpriority unsecured debts. Your medical debt will be eliminated by Chapter 7 bankruptcy with no cap on how much of your debt can be discharged. When you relieve medical debt using Chapter 7, you relieve all of it.

• Secured debts are backed by collaterals. The lender has the right to seize the collateral to recover the owed amount. 

• Unsecured debts are not backed by collateral. If you fail to pay, creditors cannot claim specific assets to recover the debt.

• Priority debts are a specific type of unsecured debts. They receive special consideration under bankruptcy law. Priority debts must be settled before other unsecured debts can be discharged. These are not dischargeable in Chapter 7 bankruptcy, meaning you are still required to pay them even after the bankruptcy process.

• Nonpriority unsecured debts are eligible for discharge in Chapter 7 bankruptcy, allowing you to eliminate these obligations as part of the bankruptcy process.

Chapter 13 Bankruptcy Treats Medical Debt Differently

Medical debt is still regarded as an unsecured debt when filing for Chapter 13 Bankruptcy. Chapter 13 considered unsecured debt differently than Chapter 7. If you file for Chapter 13 Bankruptcy, you must pay a percentage of your unsecured debts throughout your repayment plan. The percentage you pay is based on your disposable income and the amount your unsecured creditors would have received if you had filed for Chapter 7 bankruptcy. When your repayment plan expires, the remainder of your medical debt is discharged.

What to Know Before Filing Bankruptcy for Medical Debt

Before filing for bankruptcy, it’s important to understand the different types of bankruptcies you can file and how Wisconsin bankruptcy laws apply to your medical debt circumstances. Make sure you understand:

1. The costs of bankruptcy. Filing for bankruptcy involves various expenses, including court fees, legal fees and administrative costs, which can vary depending on the complexity of the case and whether you hire a lawyer.

2. How to file bankruptcy without a lawyer. It is possible to file for bankruptcy without legal representation by completing the required forms and navigating the court process on your own, though it can be complex and challenging without professional guidance.

3. Chapter 7 Bankruptcy vs Chapter 13 Bankruptcy. Chapter 7 bankruptcy involves liquidating assets to pay off debts and offers a fresh start. Chapter 13 bankruptcy involves creating a repayment plan to pay off debts over time.

4. What debts will and will not be discharged. Bankruptcy can eliminate many unsecured debts like credit card balances. Filing for bankruptcy does not discharge obligations such as student loans, child support or recent tax debts.

5. The correlation of bankruptcy and credit reports. Bankruptcy significantly impacts your credit report by affecting your credit score. You will be able to rebuild credit after some time. 

6. The Chapter 7 Means Test. The Chapter 7 Means Test determines eligibility for filing Chapter 7 bankruptcy by comparing your income to the median income for your state and assessing your ability to repay debts.

7. Bankruptcy exemptions. Bankruptcy exemptions protect certain types of property from being sold off to pay creditors.

8. The frequency of filing for bankruptcy. There are restrictions on how often you can file for bankruptcy. 

Read more about the specifics of what you should know before filing for bankruptcy in Milwaukee and Wisconsin.

How Much Does Filing Medical Bankruptcy Cost in Wisconsin?

In Wisconsin, the average filing fee for medical bankruptcy is $335 for Chapter 7 Bankruptcy and $310 for Chapter 13 Bankruptcy. When you file for bankruptcy with an experienced attorney, the risk of mistakes and having your case dismissed is minimized.

Relieve Medical Debt with Milwaukee’s Trusted Bankruptcy Lawyer 

Filing for bankruptcy can be challenging and stressful. With the support of a skilled professional like Oak Creek bankruptcy attorney Steven R. McDonald, we will successfully manage the bankruptcy process together. Attorney McDonald has 15+ years of experience assisting residents in southeastern Wisconsin, helping clients to navigate bankruptcy complexities. You're not alone in this journey, contact our office today.

Contact Steven R. McDonald to schedule a free consultation about considering filing for bankruptcy to relieve medical bill debt.

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