Medical bills can be stressful enough without repeated calls asking for payment. When those calls become a regular part of the day, it can feel like there is no room to catch your breath.
For some people, bankruptcy may provide a way to create some space from collection efforts. Chapter 13 bankruptcy, in particular, can change what creditors are allowed to do once a case is filed.
How the automatic stay changes collection calls
One of the most important protections that comes with filing for Chapter 13 bankruptcy is the automatic stay. An automatic stay is a court order that generally takes effect when a bankruptcy case is filed. It stops many collection activities, including calls, letters and other attempts to collect debts. This can apply to medical debts owed to hospitals, doctors and collection agencies.
An automatic stay does not simply erase the medical debt. Instead, it puts collection efforts on hold while the bankruptcy case moves forward. Creditors generally must stop trying to collect covered debts directly from you, which can help provide some much-needed breathing room. There are exceptions and limitations, however, and the stay may not apply in every situation.
Chapter 13 also involves creating a repayment plan based on your financial circumstances. Medical debt is generally treated as unsecured debt, meaning it does not have physical property securing it. Depending on the details of your case, you’ll repay some portion of that debt through the plan, with eligible remaining balances potentially discharged after you meet the requirements of the bankruptcy process.
If medical debt has left you feeling overwhelmed, you do not have to figure out your options alone. Speaking with a qualified legal professional can help you understand whether Chapter 13 could provide relief and what filing may mean for your unique circumstances.
