Medical Debt and Bankruptcy in Las Vegas: A path to Financial Relief

For both the uninsured and insured, medical debt can pile up quickly. Even paying the minimum monthly payments can be challenging with other life expenses. Taking out loans and similar measures only makes matters worse in some cases. Finding relief from medical debt through bankruptcy in Las Vegas, NV, can help you get back on track financially.

Contact Randolph Law Firm at 702-757-7777 to discuss whether bankruptcy is a viable choice for resolving your medical debt. Our law firm can help you understand the relationship between medical debt and bankruptcy.

How Medical Debt Can Lead to Bankruptcy

In 2021, statistics from the United States Census Bureau indicated that 15% of households in America carried medical debt. Despite a person’s best efforts to pay off this medical debt, they may not even make a dent in a large sum of healthcare expenses.

Though some doctors and hospitals offer discounts to the uninsured, the expenses of diagnostics, treatments, procedures, hospital stays, and other costs can add up quickly. Having insurance may reduce some debt, but insured individuals still have the expenses of co-pays, deductibles, out-of-network physician costs, and uncovered expenses.

For both the insured and uninsured, trying to pay off the debt may lead to financial difficulties, with some choosing to pay with credit cards or taking out a personal loan, both of which come with the price of high interest. While some doctor’s offices may take payment plans, the monthly payment isn’t always a reasonable addition to a household’s budget. Not every physician’s office offers this option, leaving a patient with a hefty bill owed immediately.

Another struggle applies to those needing ongoing treatment. While they may make progress toward paying off past debt, new financial obligations are accruing. The person is then fighting an uphill battle with no end in sight.

While all this is happening, a patient’s credit score may take a hit, hindering them from buying a house or taking out a loan. A low credit score can also affect their ability to obtain credit cards, have a utility or cable bill in their name, and rent a house or apartment.

Though medical debt relief through bankruptcy initially impacts a filer’s credit score, it allows them to look toward rebuilding, whereas they otherwise make payments with no end in sight.

Can Bankruptcy Eliminate Medical Debt?

As debtors assess their choices, they need to know the dos and don’ts of filing for bankruptcy and what it covers, including answering the question: “Does bankruptcy eliminate all medical debt?”

How Bankruptcy Affects Medical Debt

Bankruptcy can wipe the slate clean of medical debt for most filers. Some exceptions apply, which an attorney who offers medical debt and bankruptcy services can discuss on a client-to-client basis. Examples of exceptions include:

• Medical debt associated with a divorce settlement
• Fraud-related medical debt
• Medical debt the patient paid with a secured loan

While it differs based on the type of bankruptcy filed, debtors will still need to pay back the debt over time. However, the terms usually come with no or low interest, making debt recovery more feasible.

That said, answering ‘Does bankruptcy clear all debt?‘ is a bit more involved. A person can’t file for medical bills alone, so bankruptcy will remove some other debts in the process. Filers, however, will remain responsible for paying outstanding balances on the following:

• Student loans
• Alimony or child support
• Most tax-related obligations
• Fines and restitution owed
• Liens and homeowner’s association fees

A bankruptcy attorney for medical debt will discuss all financial responsibilities and educate the debtor on what’s eligible for removal.

Medical Bankruptcy Doesn’t Have to Be a Last Resort

Though a person may think bankruptcy for medical debt is a last resort, they don’t have to wait until they’re no longer adding to their medical expenses. They also don’t have to wait until the debt is unmanageable, as earlier filing can make finances easier to handle before circumstances reach the point of hardship.

Chapter 7 vs. Chapter 13 Bankruptcy for Medical Debt

Someone facing the burden of excessive medical debt has two bankruptcy options in Las Vegas — chapter 7 and chapter 11. The right choice is contingent upon the debtor’s income and financial situation. A chapter 11 or chapter 7 bankruptcy lawyer will consider the filer’s long-term financial goals to assist them in the decision-making process.

Chapter 7

Chapter 7 is ideal for those with limited income, as it doesn’t require filers to repay the money. To determine this, when somebody meets with an attorney, they’ll need to undergo the means test that evaluates their income compared to Nevada’s median income for their household size. If it’s under that amount, then they’ll qualify. While chapter 7 will drop the individual’s credit score, the effects wear off after 10 years, giving the person the ability to reestablish their creditworthiness at that point.

Under this kind of bankruptcy, the individual may need to sell their home or automobile to satisfy the debt. However, equity limits determine whether the filer can keep these assets. The attorney will educate them on these and guide them through the process.

Chapter 13

Chapter 13 bankruptcy is suitable for those with enough steady income to make monthly payments on the money owed. Though chapter 13 remains on their credit history for 10 years, it generally doesn’t impact the person’s score as much because the individual can start rebuilding sooner.

In addition, the payments count toward the person’s score, and future creditors see those who file chapter 13 in a more favorable light because it shows the individual was willing to pay their debt. Consequently, it makes them less risky as a borrower.

With this kind of bankruptcy, the filer’s home is safe, and they have an opportunity to catch up on past-due mortgage payments. They can also keep their car in most cases, and the attorney can incorporate past-due payments into the repayment plan.

Finding Legal Help for Medical Debt Relief in Las Vegas

For those in over their head in medical debt, the first step on the road toward financial recovery is reaching out to a lawyer who concentrates on bankruptcy law.

What a Bankruptcy Lawyer Can Do for You

An attorney will evaluate the client’s fiscal commitments and other factors that influence whether they qualify. Going debt by debt, the lawyer will determine what money owed is dischargeable and which type of bankruptcy fits the client’s needs and goals. If the person wants to protect their house or car under chapter 7, the attorney will educate them on the process. With a vehicle, for example, the individual may need to file an exemption before bankruptcy filing can begin.

How Long Does Filing for Bankruptcy Take?

A person may wonder, ‘How long does it take to file bankruptcy?‘ as they anticipate breaking free from medical debt and planning for the future. Bankruptcy is a multi-visit process that fluctuates on the circumstances of the case. On average, though, it only takes four to six months for the individual to get out from underneath all unsecured debt, including medical bills, personal loans, and credit card debt, with a chapter 7 bankruptcy.

A chapter 13 bankruptcy, on the other hand, takes an average of three to five years for the person to see relief. However, the exact length of time depends on the amount owed and the monthly payment amount.

Choosing a Bankruptcy Attorney

Once a person evaluates whether medical debt bankruptcy is an option, the next action is to choose a lawyer to review their situation. The attorney helps them navigate the process from start to finish. Therefore, selecting an experienced and knowledgeable bankruptcy attorney is a vital decision.

First, since it’s not a cut-and-dry process and is often lengthy, choosing somebody local is beneficial for convenience’s sake. The filer then needs to read reviews from past clients to get an idea of each lawyer’s success rate, professionalism, and listening skills. The attorney should also speak in a way that clients understand without all the legal jargon. Once the debtor decides on a few names, they should set up consultations with the top choices to see how they mesh with each legal professional and if the attorney’s approach will help them meet their financial goals.

Medical debt doesn’t have to remain on a person’s shoulders for the rest of their lives, only to carry over with their estate once they pass. Instead, opting for a medical debt and bankruptcy service can alleviate stress and let debtors move forward financially.

Contact us today to set up a consultation. At Randolph Law Firm, we want clients to focus on their health and wellness, rather than debt.