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How Can I Financially Recover from Overwhelming Medical Debt in Arizona?

A recent academic research study found that just over 66% of all bankruptcies were tied to combined medical issues, including the high cost of healthcare and the time one must spend away from work — without any income — to address their medical condition.

The research stated an estimated 530,000 families turn to bankruptcy each year because of medical issues and the bills that result from their extended care.

Medical conditions take a severe physical and emotional toll, as individuals cope with serious illnesses and diseases, and the financial consequences that follow can devastate an already difficult situation.

When medical debt has overwhelmed you, our Tucson bankruptcy attorney, Eric Ollason,  may be able to help rescue your finances by assessing your debt to asset ratio through a means test that will outline your potential bankruptcy options.

What Are My Potential Bankruptcy Options in Arizona?

There are two types of bankruptcy available to consumers in Arizona: Chapter 7 bankruptcy or Chapter 13 bankruptcy.

The first type of bankruptcy is Chapter 7, which is an option for many Arizona residents whose monthly expenses and debt payments exceed their income.

Chapter 7 candidates are typically those who have no significant assets and are overwhelmed by unsecured debts, which can include personal loans, credit cards, and medical bills.

During Chapter 7 bankruptcy proceedings, the objective is to successfully discharge all unsecured debts, allowing our clients to wipe their financial slate clean and start anew.

Simply put, when your bankruptcy results in a discharge, you have no obligation to pay back the unsecured debt that was included in the filing — including medical bills you have incurred that were not paid for by your insurance coverage before your bankruptcy petition.

Chapter 13 bankruptcy works differently.

When our Tucson bankruptcy attorney represents Chapter 13 bankruptcy candidates, we will propose a debt repayment plan by partnering with an assigned trustee to repay their overall debts in partial or whole over three to five years.

First, the payments will be distributed among their creditors in order of significance, including a home, car, or other items that can be repossessed in the event of non-payment. Under Chapter 13 bankruptcy, unsecured creditors become the last repayment priority but are still included in the plan.

The type of bankruptcy you pursue will depend wholly on which makes the most sense for your unique financial situation and whether you meet certain qualification requirements.

How Do I Know If I Qualify for Bankruptcy in Arizona?

If you are overwhelmed by medical debt, you must meet specific criteria to be eligible for either Chapter 7 or Chapter 13 bankruptcy.

First, you must pass the means test.

The calculation begins with your total income minus:

  • All insurance costs including healthcare, life, or disability
  • Any court-ordered payments including child or spousal support
  • Childcare costs for non-educational childcare
  • Daily household expenses for food, supplies, and clothing
  • Housing and utilities including rent or mortgage payments
  • Taxes according to your marital status, dependents, and deductions
  • Transportation expenses including gas or public transportation
  • Vehicle payments whether owned or leased

The remaining number is considered disposable income.

If your disposable income is not enough to cover a portion of the debts that you owe during a Chapter 13 repayment plan, you have passed the means test to file for Chapter 7 bankruptcy.

How Can Eric Ollason Help Determine My Bankruptcy Options?

Determining your bankruptcy options involves a complex process of outlining and documenting your complete financial standing.

Small mistakes, including listing conflicting amounts or omitting items can jeopardize your ability to successfully file for bankruptcy, which is why it is important to talk with an accomplished bankruptcy attorney in Tucson, so no detail is left to chance.

For more than two decades, our bankruptcy law office has helped our Pima County residents pursue their options based on their complete dischargeable and non-dischargeable debts, so they can look forward to getting their finances back on track.

If you are considering bankruptcy, or have questions about whether you qualify, contact our Tucson, Arizona bankruptcy attorney, Eric Ollason, today by calling (520) 791-2707 to discuss your case during a free consultation. The stress of your medical condition should not be compounded by the medical debt that follows. Call us today to learn how we can help you get a fresh start.

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