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Category: Consumer Protection Law
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Experience:  20 years experience in consumer advocacy, debt collection violations, contracts, construction
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Deciding whether to file medical bankruptcy (Chapter 7). Was

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Deciding whether to file medical bankruptcy (Chapter 7). Was in car accident 2009, not my fault, but lawyer thought defense will and took no depositions. Defense did not, so when time for trial came. He dropped me and all the medical bills in subrogation came to me. I pay a little each month, but now they are becoming overwhelming. The bill I got done from $74000 to $10000, and they missed my diagnosis and ended in emergency surgery for unstable spine. Credit is poor now. So is it worth paying a little month, or wipe the slate clean. How much worse is chapter 7 going to affect my credit? It is only medical bills. I own nothing, except my car so they probably will not pursue for assets.
Submitted: 11 months ago.
Category: Consumer Protection Law
Expert:  Law Pro replied 11 months ago.

Welcome to JustAnswer! My goal is to do my very best to understand your situation and to provide a full and complete excellent answer for you.

My name is XXXXX XXXXX X'm going to assist you with your question.

Please bear with me if you believe my answer isn’t coming fast enough because I’m also working with other customers too. I apologize for any seemingly late response.

So sorry for your situation.

Did you reach settlement with the defendant or was the case dismissed or what?
Customer: replied 11 months ago.
Dismissed
Expert:  Law Pro replied 11 months ago.
When was it dismissed?

Have you had an attorney look at your case as to possible legal malpractice?
Customer: replied 11 months ago.
Yes, they said solo practitioner with very little
coverage, not worth the effort, but all agreed with you
malpractice.
Expert:  Law Pro replied 11 months ago.
Oh, I'm so sorry.


That was my very initial thought after your discription of the events.

What do you think your total amount of debt is?

Where does your income come from and how much do you "gross" monthly?

Any dependents?
Customer: replied 11 months ago.
Debt about $15,000. I am a scientist. Pay $70000. No dependants.
Lost pay last year when I was assaulted and suffered
TBI. Out 8 mos. Civil case pending.
Expert:  Law Pro replied 11 months ago.
So you have a total debt (the medical and other debt) of about $100k and income of $70k gross annually. No dependents.

Is that correct?
Customer: replied 11 months ago.
Debt $15000
Expert:  Law Pro replied 11 months ago.
Is that debt you're posting $15k or $150k - because medical debt IS also debt?


Total debt including medical debt is $150k - correct?
Customer: replied 11 months ago.
No, $15000
Expert:  Law Pro replied 11 months ago.
Oh, then if it's that amount - it would not be worth it for you to file bankruptcy.

You would not be able to file Ch 7 but only a Ch 13 and would basically have to repay that debt anyway given your income of $70K.

Because of the "means test" (which is a formula they use to determine your disposable income) - the court and trustee would not allow you to file a Ch7 bankruptcy.

Ch 13 bankruptcy is one of the more commonly used bankruptcy chapters, behind Ch 7. Unlike Ch 7, Ch 13 does not involve liquidation. Usually, a Ch 13 debtor is permitted to keep all of his property, whether it is exempt or not, as long as the Ch 13 plan complies with the law.


Ch 13 may also involve more expense than a Ch 7 in terms of attorney's fees, as the process is more complicated and drawn out.


Ch 7 is a comparatively brief process, which often lasts several months. On the other hand, Ch 13 bankruptcy will last from 3 to 5 years! This lengthy time period is due to the fact that Ch 13 involves regular monthly payments to the Chapter 13 trustee for the plan period. The plan period will vary from 3 to 5 years, depending upon whether your income is generally above or below the median income for your state of residence.

 

The Ch 13 plan, or simply the payment plan, is how Ch 13 works. Ch 13 is an attempt to "reorganize" an individual's debt by paying certain creditors over a period of time. The debtor's income is analyzed by the means test, which determines the disposable income of the debtor. The disposable income will then be used to make the monthly plan payments. Depending upon the means test calculation, there may be no allocation at all to unsecured creditors, such as credit card companies and medical bills.



So, as to your credit rating:

Accurate negative information generally can be reported for seven years, but there are exceptions:

Bankruptcy information can be reported for 10 years;
Information reported because of an application for a job with a salary of more than $20,000 has no time limitation;
Information reported because of an application for more than $50,000 worth of credit or life insurance has no time limitation;
Information concerning a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer; and
Default information concerning U.S. Government insured or guaranteed student loans can be reported for seven years after certain guarantor actions.
Tax liens stay on 7 years from the date PAID.


I would think that you should contact the medical providers and negotiate a repayment plan with them. Too, most medical providers will agree to a lump sum payoff amount which is about 50% of what is allegedly owed.

If you could get the monies somewhere you could substantially reduce that medical debt by half.


Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!

If you have any questions, about this or anything else, please ask for me, Law Pro, directly in the question and I will try to assist you as best I can.

For example, you would state, "This question is for Law Pro . . . (then on with your question).

Law Pro, Lawyer
Satisfied Customers: 23468
Experience: 20 years experience in consumer advocacy, debt collection violations, contracts, construction
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