It only takes one medical crisis to set you back thousands of dollars. In fact, medical debt is the number one reason people file for bankruptcy. Bankruptcy is a part of the U.S. Constitution built to help people in financial crisis. So how do you know when it’s the right time to file bankruptcy?
The following factors are indicators that you should consider filing for bankruptcy, or at least sit down with an experienced bankruptcy attorney to discuss your options in more detail.
- If your debt amount is more than 40 percent of your income. The higher the debt-to-income ratio a person has, the less likely it is he or she will earn enough money to ever pay back the debt;
- If you are using debt, such as credit cards or unsecured personal loans, to pay for other debts;
- If your debts include items that can be liquidated in bankruptcy, such as medical debt, credit cards or personal loans;
- You are using payday loans to help cover necessities before your next paycheck. This is oftentimes a sign your expenses are exceeding your income;
- If you are forgoing necessities such as healthcare, prescriptions, or food;
- If the collection calls have reached a breaking point;
- If you have been threatened with a lawsuit, are being sued by a creditor or your wages are being garnished.
How is Medical Debt Handled in Bankruptcy?
In bankruptcy, medical debt is treated the same as credit card debt. Medical bills are listed as general unsecured debt and can be easily wiped out in a Chapter 7 bankruptcy filing. Making the decision to file for bankruptcy is never an easy one. It can be difficult to get past some of the myths associated with filing for bankruptcy. Sometimes by waiting, an individual facing a lot of debt can find himself or herself in an even worse situation. Filing for bankruptcy can help protect valuable assets, including your home, pension, IRA and social security. It will put an end to wage garnishment and any lawsuit being filed to collect on the debt, thanks to the protections of the automatic stay.
Those who have experienced illness or injury and found themselves overwhelmed with medical debt should contact an experienced Miami bankruptcy attorney. In bankruptcy, medical bills are considered general unsecured debts just like credit cards. This means that medical bills do not receive priority treatment and can easily be discharged in bankruptcy. Bankruptcy laws were created to help people resolve overwhelming debt and gain a fresh financial start. Bankruptcy attorney Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken, P.A. has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade & Garcia website at www.miamibankruptcy.com.