Medical Bankruptcy Types

Available bankruptcy types for medical bankruptcy discharges

Serious illness and personal injuries account for approximately 20% of all bankruptcy types. Because the soaring cost of medical care accumulates without regard for medical insurance, medical bankruptcy is a fact of life for the uninsured. All bankruptcy types potentially discharge extraordinarily large hospital expenses, yet the means used for discharge creates dramatic differences in the burden upon debtors.

Chapter 7 offers full discharge of all medical expenses. Trustees in these bankruptcy types seldom question the necessity of discharging hundreds of thousands of dollars in expenses for disabled individuals who earn below average income. Property owned is the primary issue considered when filing. All non-exempt property must be surrender according to Chapter 7 Code requirements. In particular, the allowable exemption for homestead equity is limited in all but two states, and when patients require the greatest security, homes may be lost. After October 17, 2005, Federal law preempts state law with a new maximum limitations on homestead exemptions.

For anyone facing medical bankruptcy, legal counsel regarding property exemptions and residency requirements is essential. For more information, see: