Medical debt can be daunting and can continue to pile up which is why it is helpful for anyone faced with medical debt to be familiar with personal bankruptcy protections. Personal bankruptcy protections can provide relief from medical debt and other types of debt and help struggling consumers move on with their lives debt free.
Medical debt is considered unsecured debt which means it is a type of debt that is not secured by property or another asset. Unsecured debt receives treatment most favorable to the filing party during the personal bankruptcy process. There are two types of personal bankruptcy protection and either of the two types can provide relief from overwhelming debt, including medical debt and other debt, the filing party may have accumulated.
The two types of personal bankruptcy are Chapter 7 bankruptcy and Chapter 13 bankruptcy and both types are options for those faced with crippling medical debt to consider. Chapter 7 bankruptcy is a liquidation bankruptcy option and Chapter 13 bankruptcy is a reorganization bankruptcy option. During a Chapter 7 bankruptcy, assets are liquidated to repay creditors and during a Chapter 13 bankruptcy, a repayment plan is worked out with the bankruptcy court so that the filing party can repay their debts over a longer period of time.
It is important to know who qualifies for the two different types of personal bankruptcy and to also be aware that once a bankruptcy filing has been made, an automatic stay goes into effect to protect the filing party from creditor collection actions during the bankruptcy process. Understanding the benefits of personal bankruptcy protection, and how personal bankruptcy options can help with important concerns like medical debt and other types of debt, is an important step along the path to debt relief.