• Medical Bankrupty Happens To Anyone"Dermat¨®loga" is Copyrighted by Flickr user: Daquella manera (Daniel Lobo) under the Creative Commons Attribution license.
  
  

Statistics

• A report published by Harvard Law School, written by Professor Elizabeth Warren, estimates that 5 million American families filed for bankruptcy in the aftermath of medical debt from 2000 through the first half of 2007. The report also states that 75 percent of those who responded to the survey claimed that illness led to the filing of bankruptcy even though they had medical insurance at the onset of their medical situation.
  
  

Bankruptcy

• Filing for bankruptcy based on medical debt is not a separate process from filing personal bankruptcy. Medical debt may be part of a Chapter 7 bankruptcy, which leads to a total discharge of these debts. It may also be part of Chapter 13 bankruptcy, in which you go to court to reorganize your debt and make it easier to pay. During either of these processes, you will need to state why you are filing bankruptcy.
  
  

Judgments

• If you have medical debt that is unpaid, creditors--including medical creditors--may place a judgment against any assets you own, to the extent allowed by law. An example of this is a creditor placing a lien on a home in an effort to collect the debt. However, you can stop this process by filing bankruptcy, and this is often the reason many file.
  
  

Process

• To file medical bankruptcy, you might consider hiring a bankruptcy attorney. Although not required under law, the expertise of a bankruptcy attorney can reduce mistakes. To find out the laws regarding bankruptcy in your state and to obtain necessary forms, visit the U.S. Courts Website (See Resources.) State laws on exemptions and qualifications vary.
  
  

Results

• After filing Chapter 7 medical bankruptcy, a court will rule to discharge the debt. Creditors may protest the proceedings, but this is rare. Most individuals must take financial education courses and may need to work with a consumer credit counseling service before the debt is discharged. After you receive official notice from the local bankruptcy court of the discharge, you no longer have to repay the medical debt. However, you may have difficulty obtaining new credit and loans for some time after filing bankruptcy. Bankruptcy remains on your credit report for up to 10 years.