Medical debt can overwhelm you, especially when unexpected emergencies lead to high bills. If you struggle with medical expenses, you might wonder if Chapter 13 bankruptcy helps. In Texas, this type of bankruptcy lets you restructure debts, including medical bills, into a manageable repayment plan.
How medical debt works in Chapter 13
Medical bills fall under unsecured debt, similar to credit cards or personal loans. In a Chapter 13 bankruptcy, the court combines unsecured debts into a repayment plan that typically lasts three to five years. Your income, expenses, and total debt determine the amount you pay. Once you complete the plan, you may eliminate any remaining eligible medical debt.
Factors that affect medical debt repayment
Your ability to repay medical debt under Chapter 13 depends on multiple factors. Courts evaluate your disposable income, which is the money left after covering basic living expenses. Texas law also provides certain exemptions, protecting assets like your home or vehicle from being used to pay unsecured creditors. If your income is low, you may only need to pay a portion of your medical debt before eliminating the remaining balance.
Benefits of including medical debt in Chapter 13
Filing for Chapter 13 bankruptcy stops collection efforts, preventing creditors from suing you or garnishing wages. This relief allows you to follow a structured repayment plan. Unlike Chapter 7 bankruptcy, which requires selling certain assets to pay off debts, Chapter 13 lets you keep your property while making affordable payments.
What happens after completing Chapter 13?
Once you finish your repayment plan, you no longer need to pay any remaining qualifying medical debt. However, maintaining good financial habits after bankruptcy helps rebuild credit and avoid future financial strain.