Can Medical Debt Be Discharged in Bankruptcy in Arizona?
Since the COVID-19 pandemic began in 2020, many Arizonans have racked up medical charges. Now, they are faced with medical bills that they cannot pay. Some Arizonans may be considering filing for bankruptcy in Arizona as a way to discharge medical and other debts they have accrued.
One of the biggest motivators for Arizonans filing for bankruptcy is excessive medical debt. In some cases, bankruptcy discharge can eliminate your medical debt or can structure it so that it is more affordable for you to pay off. Either way, you should seek the assistance of our expert Arizona bankruptcy lawyers to help you.
Organizing Your Total Debts
When you consult an Arizona bankruptcy attorney, they will ask you to help them assess and organize your debts and your assets. Your debts will be organized based on whether they can be considered “priority debts” or “non-priority debts.” Debts that cannot be discharged, like child support and back taxes, are considered priority debts. Non-priority debts are debts that can be discharged, such as medical debt. If you have any income or assets available, it will be used to pay off priority debts first. There is a high likelihood that your medical debt will be discharged when you file for bankruptcy.
Filing Chapter 7 Bankruptcy in Arizona
Filing Chapter 7 bankruptcy in Arizona is also called “clean slate” bankruptcy, as it entirely eradicates unsecured, non-priority debt like credit card bills and medical bills and credit card bills. Even if you had to resort to paying medical bills with credit cards, your medical debts will likely be completely eliminated when you receive a Chapter 7 bankruptcy discharge in Arizona.
You must meet the eligibility requirements in order to file for Chapter 7 bankruptcy, however. This includes proving that your disposable income falls below the allowable threshold. You must also show that you do not have more assets than what is allowed in order to file for Chapter 7 bankruptcy.
Filing Chapter 13 Bankruptcy in Arizona
Chapter 13 bankruptcy in Arizona is often recommended to debtors who cannot qualify for Chapter 7 bankruptcy. When you file for Chapter 13 bankruptcy, your income and your debts will be analyzed. Then, an affordable payment plan will be calculated by a bankruptcy trustee over three to five years, so that you can pay off your debts. You must pay a single amount to this payment plan each month, and that amount is distributed among your creditors.
Priority creditors are paid first under Chapter 13 bankruptcy, and non-priority creditors after that. It is, therefore, quite likely that you will pay little to nothing towards your non-priority medical debt in comparison with other priority debts.
Should I File for Bankruptcy in Arizona?
The only way that you can truly know if filing for bankruptcy, either Chapter 7 or Chapter 13, is right for you is to meet with an experienced Arizona bankruptcy attorney who will help analyze your financial situation. They can assist you in understanding the various bankruptcy options available to you, with the ultimate goal being achieving the maximum debt relief possible.
If medical bills and other types of debt have become a burden, contact our Arizona bankruptcy attorneys today to see how we can help. Our experienced, seasoned lawyers will analyze your financial situation and work with you to determine if filing for bankruptcy can help you. We help clients in filing for Chapter 7 and Chapter 13 bankruptcy every day. Only through a thorough tallying of your debts and assets can an Arizona bankruptcy attorney determine if filing for bankruptcy is right for your situation. Contact us today!