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Gilligan1065

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Can I file for bankruptcy for medical debts, approx $5000.00

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First, yes, medical bills can be discharged in a bankruptcy (Chapter 7 or 13).  I filed a Chapter 13 back in 2006 (after the newer Draconian laws were passed).  And part of my debt (a pretty small part, actually) was medical debt.  The only bills you have to worry about involve debt to the U.S. government (ie., unpaid taxes, unpaid Federally-funded student loans, etc.).  Also, you might be liable for one other thing ... but check with a bankruptcy attorney first because I honestly don't know.  Over the last few years, the I.R.S. has taken a keen interest in "deadbeat parents" who owe back child-support.  I'm not sure a modern-day bankruptcy will let you discharge this kind of debt.

However, keep what "policebox" said in mind.  Since the newer rules became law (2005, I think), bankruptcy is a means-tested thing.  Again, check with a bankruptcy attorney on that.

I wanted to say one more unrelated thing regarding garnishment.  This might be considered politically incorrect, too (grin).  But it happens to be the way things are.  However, let me preface my comments by saying that my Chapter 13 was successfully discharged in 2011.  And since then, it has been removed from my credit bureau files (last year - 6 years from filing date).  I've been actively rebuilding my credit since then and now have an Equifax score of 725.  I've also acquired 5 credit cards (2 VISA cards, 2 Discover cards, and 1 Texaco/Chevron credit card).  The last card I acquired was a Chase Slate VISA with a $3,000 credit limit.  However, courtesy of willpower, I limit all charges to buying stuff I normally would have paid cash for (or used a debit card) and pay off my monthly bills from all 5 credit cards IN FULL (usually, on the date I receive the bill).  In short, I'm debt-free for all intents and purposes, pay virtually no interest, yet am able to increase my credit score by paying all my bills on time.  And, I intend to keep things that way.

I retired from the Postal Service in 2011 - 2 months after my Chapter 13 discharged.  After I divorced my wife earlier, I had no problems with my own bills.  But then my ex filed a Chapter 7 and her creditors came after me with a vengeance (in a community property state) - which is the only reason I filed a Chapter 13 in the first place.

Anyway, I'm now retired and have only two sources of income ... my Postal pension (paid via direct-deposit from the U.S. Treasury) and Social Security (also paid via direct-deposit from the U.S. Treasury).  Total yearly gross income - $31,524.  That's not a lot ... but where I live (rural Washington state), I'm actually living quite comfortably.

Now, on to the subject of garnishment.  What I'm about to say may seem untrue.  But if it does, please quote me a case-law example to prove me wrong (grin).  I'm a very responsible guy when it comes to paying my bills.  But what if I wasn't?  What if I was irresponsible, charged up my cards to their maxes, acquired other debt (medical, etc.), and then ignored my bills?  As long as none of that debt was Federal, I'd secure my financial well-being by simply filing a Chapter 7.  My income would pass the "means test."  Even before bankruptcy, creditors could NOT garnish my two Federal deposits because only the U.S. Treasury can garnish a U.S. Treasury payment (it's the law).  In addition, they could not seize the bank account into which U.S. Treasury payments are made unless the account balance was over $10,000.  Also, they couldn't seize my vehicle unless the low Blue Book value exceeded $7,000 (mine doesn't).  So, all I'd have to do if put all other money above $10,000 in a safe-deposit box and drive only older cars worth less then $7,000.

I don't envision EVER doing this.  But I wanted to play "Devil's advocate" on the subject.

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Just a P.S. on my divorce and its aftermath.

As mentioned earlier, I lived in a community property state at the time of my divorce.  Since I brought home two-thirds of the family income, and since my ex single-handedly incurred two-thirds of the family debt, the traditional "fair" solution (ahem) would be to assign me with two-thirds of the family debt AND require me to pay spousal support for five years.  A friend of mine got zapped that way in his divorce.  But (grin), I managed to escape both.

It's not because I was all that smart ... nor was it because my attorney was all that smart. It's because my ex and her attorney made a couple of serious legal blunders during the trial - both of which led to contempt-of-court citations.  When I filed, her attorney asked for a list of my debts and assets.  I had all that info on my computer and printed it out (it took less than one printed page).  My attorney then asked for reciprocity - that he receive a list of my ex's debts and liabilities.  Her attorney never complied with that - even though, the third time it was asked for, the judge made it "court-ordered," giving her a deadline to comply.  The deadline passed.

That was contempt-of-court citation #1.  The second was for something a lot more serious.  And there's some good humor in this, too.  On the date of our hearing, my attorney and I showed up but my ex and her attorney did not.  But just before the hearing started, the court clerk passed a note to the judge.  My ex's attorney said that she'd suffered a back injury that had incapacited her for a week - asking the judge for a postponement.  He was nodding sympathetically and was about to grant her wish when the court-clerk ran up to the judge and whispered something in her ear.  The judge then said there'd be a temporary recess while he and his clerk conferred in the judge's chambers.  They disappeared. A few minutes later, the chambers door opened to a crack with the clerk motioning to my attorney to join them in chambers.  He disappeared.  A few minutes later, all three of them emerged from chambers.  I asked my attorney about what was going on and he said he'd tell me later.

The judge called me up to the witness stand, had me sworn in, and merely told me that my ex and her attorney would not be present.  He said that HE would ask me some questions and pass the answers on to my ex's attorney.  So, he asked me some questions, I answered them honestly, and the judge banged his gavel - saying a 2nd hearing would occur a week later, same time, same place.

My attorney and I rode in his car to the courthouse.  So, he took me back to his office where my car was parked so I could go home.  On the way back to his office, he was laughing and told me what had happened in chambers.  Remember that my ex's attorney said she'd been laid-up for a week with an incapacitating back injury.  Well, the night before the hearing, the court clerk attended a ****tail party for court employees and a few lawyers.  And (snicker), my ex's attorney was there, whooping it up with everyone else.  The court clerk recognized my ex's attorney but apparently, my ex's attorney didn't recognize the clerk.  Bottom line?  My ex's attorney was caught red-handed telling a bald-faced lie to the court - which led to her 2nd contempt-of-court citation.

That's a serious legal infraction - something for which an attorney could be disbarred.

Needless to say, the judge was still furious at my ex's attorney when the 2nd hearing was held.  And the judge basically gave me everything I asked for when I filed - namely, a "clean break" where her assets and liabilities would remain hers and mine would remain mine (including retirement money).  The judge also ordered that the decree would be "non-modifiable," making it impossible for my ex to renegotiate the divorce settlement later.  He was about to bang his gavel again to end the hearing when my ex's attorney jumped to her feet and said, "But your honor, isn't there going to be any provision for spousal support?"

Hehe, remember the first contempt-of-court citation?  When my ex's attorney didn't comply with the court ordered reciprocity by the deadline, the judge ordered a credit-report on my ex.  I suspect my ex was following the advice of friends (or possibly, her attorney) who told her to charge her credit up to its max, knowing that I'd get zapped for two-thirds of it.  And that's exactly what my ex did.  Unfortunately for her, in our state, that's referred to as "sandbagging" - an attempt to fool the court into an unfair distribution of debt.  That's "why" the judge accepted my idea of her debt being hers and mine being mine.

Anyway, when my ex's attorney asked the "spousal support" question, the judge began looking at my ex's credit report.  Then, looking in her direction (my ex, not her attorney), he said, "Mrs. West.  Given the largesse of debt I see in front of me, and given the manner in which it was accrued, I'd never have awarded spousal support to you either."

The judge banged his gavel.  My attorney leaned over and whispered, "Slam dunk," in my ear.  And, that was that.

Sadly for me, I was lulled into a false sense of security - thinking the judge's order that my ex's debts were hers and mine were mine was set in stone.  But in a community property state, if your ex files Chapter 7, you inherit her debts - regardless of what a divorce decree might say.  Live and learn.

Reply by
edgnla

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I would like to talk to you on matters that concern me. I'm 62 and have medical bills around 20,000. I dont want to give any more info here, but would like to chat with you on a more personal direct basis. my number 201 213 1498 my name is Ed

Reply by
RondaGale

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I was just told by a Law group that they could garnish my disability check for a $954 bill to a clinic I went to that I was told was a free clinic when I did not have insurance. They bullied me into the agreement to pay by sending a sheriff to my door. My car is only BB at about $2000. They know I am on disability.. Can they do this?

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yes you can

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bankruptcy for $5000 medical debts

Why would you want to file bankruptcy for such a small amount, when your credit will be affected for up to 10 years.  Now if the amount was say $100,000 or more, it might be a good idea as you could get some relief to get your life back together.

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Just my take.  I don't understand why a specific dollar amount would matter as a reason for bankruptcy.  If a person has only enough income and/or assets to cover day-to-day bills, upsetting that applecart could be the difference between living in an apartment and living under a freeway overpass.  And creditors don't wait to sue, garnish, and seize assets ... especially if collection agencies and/or lawyers become involved in the debt collection process.

This comes from personal experience.  My divorce decree stated that my ex's debts were hers and my debts were mine.  And following the divorce, I was doing just fine meeting my own obligations.  But then she filed a Chapter 7 - and her creditors came after me with a vengeance.  Two of her debts were turned over to attorneys (about $3,000 each) and they sent me "ultimatim" letters threatening adverse legal action.  While I could handle my own debts, I couldn't handle her debts at the same time.  Her debts were between 2-3 times greater than mine and (sigh) our divorce took place in a community property state.  Hint - community property law supercedes any divorce decree when it comes to debt.  Bottom line?  I had to file a Chapter 13 to "stop" any adverse legal action.  But, I didn't "jump" at bankruptcy.

The first thing I did when my ex's creditors started hounding me was contact a consumer credit counseling service that promised to "work" with creditors.  But if you read the fine print of their agreement, they state clearly that they cannot "guarantee" that a creditor won't change their mind later and take you to court anyway.  After 10 on-time monthly payments to the credit counseling service, the two attorneys mentioned earlier did just that.  Filing a Chapter 13 stopped them in their tracks - just days before their scheduled court filings would have taken place.

One note.  Seeking help from credit counseling services is exactly what creditors want to see.  It allows them to accept payments from debtors while, at the same time, making no promises that they'll continue to be "nice."  So, seeking help from these counseling services is akin to "Whistling past the graveyard."  Doing so is a "maybe" response to debt.  Bankruptcy is a "definite" response.  Also (something I found out later), seeking help from a credit counseling service puts a derogatory note in your credit file ... no better than if you'd filed bankruptcy.  This makes the choice between counseling and bankruptcy a choice between "maybe protection" and "definite protection" from adverse legal action - with neither choice doing your credit record any good.

After all, credit reports reflect financial "fact," not financial "good intentions" toward debt.

P.S.  In a post below, I erroneously said my Chapter 13 got dropped from my credit reports 6 years after I filed.  That's actually 7 years (it was a typo).  So while a Chapter 7 can hang around for 10 years, a Chapter 13 only hangs around for 7 years.

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Really???

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So what are you supposed to do when your body just shuts down at time when you can't even afford to feed your children and your insurance is crap???  It's not that easy.  I owe 8 grand in medical bills and they are to about 20 different creditors.  Making a monthly payment to each one is not possible.  Your body doesn't wait till you have the money to pay!

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bankruptcy

yes you can but it WILL HURT YOUR CREDIT NO MATTER WHAT SOMEONE SAYS. I know. 

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Hmmm ... I don't recall anyone suggesting that bankruptcy "didn't" hurt a credit record.  It always does.  And, a Chapter 7 bankruptcy can remain on a credit record for 10 years from the filing date - while a Chapter 13 bankruptcy stays on for 7 years from the filing date.  But filing bankruptcy, in my opinion, has gotten a "bad rep" it doesn't deserve.

A lien or judgment can stay on your credit record "forever."  So can bad debts that continue to be reported as unresolved by the creditor.  Beyond credit record issues, there's also the fact that liens, judgments, and bad debts often end up in the hands of collection agencies & attorneys who can tack on their "own" fees.  In short, they can turn a big debt into a monstrous debt.

That happened to me after my ex filed a Chapter 7 following our divorce.  Her creditors came after me (community property state).  That's when I made a big mistake - trusting a consumer credit counseling service to consolidate debts and possibly lower them.  You see, if a creditor accepts a debt repayment plan, it doesn't mean they're obligated to accept it "forever."  They can change their minds on a whim if they think it's to their advantage to do so.

After 10 on-time monthly payments into the plan, attorneys for 2 of my ex's creditors decided to abandon the plan and ask for their own separate repayment plans.  Their plans included attorney fees and interest penalties that would have made it impossible for me to pay off all the other creditors (unless I wanted to live under a freeway overpass).  One of the attorneys even sent me a summons to appear in court - obviously in an attempt to solidify debt repayment in his favor.  And that's when I consulted with a bankruptcy attorney ... filing a Chapter 13 just days away from the scheduled court appearance.

Now ... I would never suggest that people should avoid consumer credit counseling services.  I'm sure that they've been of value to a number of people in debt.  But people need to realize an important difference between those services and a bankruptcy.  Those services cannot "guarantee" you anything ... period.  Bankruptcy, on the other hand, is the "only" guaranteed method to stop creditors, collection agencies, and attorneys dead-cold.  And in the case of a Chapter 13, this even includes the I.R.S.

During the 5-year repayment plan of a Chapter 13, the I.R.S. is assigned a priority status for repayment.  But otherwise, they're "power" to collect, garnish, or seize property & assets is "taken away" by a U.S. District Court order they can't argue or bargain with.  In fact, all tax debt over 3 years old is automatically "forgiven" by court order.  The I.R.S. becomes just another debtor on the list.  Their priority status guarantees that they'll be the first people to receive payments under a Chapter 13 - but nothing more.

Perhaps the 2nd most important financial benefit of a bankruptcy is that it stops the accumulation of interest and fees charged by a creditor (or their attorney).  Especially to an attorney, interest and fees are their life-blood.  That makes a bankruptcy an option that strikes fear into the hearts of a creditor.  Hehe, after I decided to file Chapter 13, I called the two attorneys who were hounding me.  Both offered me much lower fees and interest if I didn't file.  But my bankruptcy attorney told me that this was a "trick" to get me not to file - that if I agreed to their terms, they could always "change" their terms at a later date.  So, I just filed.

But, the number ONE reason why bankruptcy is better than consumer credit counseling services is this.  Let's say you went to such a service and they said, "Congratulations!  We were able to reduce your $50,000 debt to only $5,000 and lower your payments over the course of the plan!"

Well, guess what.  They're being mostly truthful with you - but are withholding one teensy bit of info in telling you that.  Let's assume you're merrily paying off your $50,000 (now $5,000) debt when, in January, you start receiving 1099-C forms from your creditors.  The $45,000 that creditors "forgave" was submitted to the I.R.S.  And that money becomes "ordinary income" upon which you must claim on your 1040.  See this page:

http://www.bankruptcylawnetwork.com/what-is-a-1099-c-what-do-i-do-about-it/

If you want to "get out" of paying taxes on that $45,000, you must convince the I.R.S. that you were "insolvent" during that year.  Filing bankruptcy is a "gimme."  If you can prove you filed bankruptcy to the I.R.S., your $45,000 extra ordinary income is "forgiven" and need not be reported.  But if you let a consumer credit counseling service issue a "plan," you must convince the I.R.S. of insolvency by filing a form 982:

http://www.irs.gov/pub/irs-pdf/f982.pdf

Thing is, while a bankruptcy proves you're entitled to be forgiven this $45,000 of extra ordinary income, proving insolvency in other ways is a "maybe" scenario.  Maybe the I.R.S. will be convinced.  Maybe they won't.

FWIW, when I filed Chapter 13, my creditors didn't even bother to send me 1099-C forms.  They knew that I'd never be held responsible for any amounts written-off.

Bottom line?  Yes, bankruptcy hurts your credit record.  But the credit record of someone faced with intractible debt can be hurt just as much by allowing a consumer credit counseling service to issue a debt-repayment plan.  It places a similar derogatory not on your credit record, too - just as bad as a bankruptcy.  But debtors can be hurt in so many other ways by NOT filing bankruptcy.  Quite honestly, if I ever find myself in an intractible debt situation in the future, bankrupcy will not be my "last resort" - but my "first" resort.

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Bankrupt Med

The part about paying your med bill, well that's well and good for people that has good paying jobs. What about those people that's home less and without work.    These people need help too and this maybe their only way out. After retuening to work. Everyone has their own situations. They need to do what's best for them.  So if that's what it takes to get a good credit score then do it.

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Bankruptc For medical Bills

Check  with a lawer in your state, most states will alound this to happen. Chaper 7 is the best way to go.

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bankrupt med

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Yes sir you can bankrupt med bills. in fact i have a family member that filed bankrupt on back child support. how i dont know but it did happen. 

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Medical bills and school loans

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Medical bills and student loans are not considered as eligible for bankruptcy.  Another thing to consider is though is that $5000 is NOT NEARLY enough debt to consider bankruptcy.  Also, the good thing about medical bills is that as long as you are contributiing something, even $5/$10 a month, you can keep them at bay until you can pay them off with say a tax return or something.  Being financially responsible means making sacrifices in order to keep your "financial house clean".  Do the hard work now so you don't have to deal with it the rest of your life. 

Reply by
lixabrazil

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@benspn77

you don't know what u are talking about. Medical can be discharged on a bk.

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Reply by
switchman70

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The medical bills CAN be discharged in BK.

I agree with others, don't know if I'd take the 10 year BK hit over 5K.

Benspn77 is correct, making a small monthly payment on the medical bills will keep them from filing a collection alot of times; other times they are unresponsive.

Staying on top of things is always the best course, the bills aren't just going to go away.

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coopi

Helpful to 2 out of 17 people

Just pay your bill,  you owe it don't you? what if the hospital owed YOU five grand would you want to be paid? they were there when you needed them so do the adult thing be responsible and pay your debt, you will feel better in the long run. Beside your credit report will thank you. do you want that on your record for ten or more years? Thats a long time when you think about it.

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