Medical Bills & Credit Cards in Chapter 7 Bankruptcy
In Chapter 7 Bankruptcy, you are typically able to “wipe out” (discharge) your credit card debts completely. Your home, car and other personal property generally are “exempt” (protected from sale) and cannot be sold in a Chapter 7 Bankruptcy.
In a Chapter 7 Bankruptcy, the trustee is only allowed to sell non-exempt items to pay off your debts. However, most people who qualify for Chapter 7 do not have any assets that are valuable enough to be sold. That means that in most Chapter 7 Bankruptcy cases, your obligation to pay the balance on your charge cards or medical bills will simply be “discharged” – upon successful completion of the case. (Note: there are a few exceptions in the case of fraud.)
Medical Bills & Credit Cards in Chapter 13 Bankruptcy
If you have a steady income, Chapter 13 Bankruptcy also offers you debt relief from your charge cards and medical bills. Under Chapter 13 Bankruptcy you do NOT have to sell your assets or property to pay creditors. Instead, Chapter 13 allows you to agree to a “Repayment Plan” that will reduce your payments and repay creditors over a longer period of time – usually three to five years.
Under both Chapter 7 and Chapter 13 you are completely protected from garnishments, harassing phone calls, lawsuits and other creditor actions. From the moment your lawyer files bankruptcy, your creditors must deal only with the trustee and your lawyer – and legally they must leave you alone.