Are you worried about your medical bills and contemplating bankruptcy? It’s not just you. Medical debt is a problem for millions of Americans. But some might be curious about how our possible bankruptcy would be impacted by changes to the sorts of medical debt that are shown on your credit report. What you need to know is as follows:
Medical Debt: What Sort of Debt Is It?
If you have medical debt and are thinking about filing for bankruptcy, you need to know the distinctions between secured and unsecured debt. Having this knowledge might be useful if you want to file for bankruptcy. So, what distinguishes unsecured debt from secured debt?
An asset is not used as security for an unsecured debt. This implies that your assets won’t typically be taken if you fall behind on payments. Since your property cannot be confiscated without a court order, the lender can engage a debt collector and contact the credit reporting agencies (TransUnion, Equifax, and Experian) to report that you have fallen behind on payments. Medical expenses, payday loans, school loans, and child support payments are a few examples of unsecured debt.
This kind of debt has an asset serving as security or collateral. This reduces the potential risk associated with lending. This reduces the potential risk associated with lending. Mortgages, vehicle loans, and title loans are a few examples. A lender has the right to take back or foreclose on an asset if you are late on payments or default. If this happens, the item is auctioned off to recoup the expenses. What happens then if the price paid for the item is less than its cost? You can face legal action from the lender to recover the outstanding amount.
What Gives? My Medical Debt Won’t Appear On My Credit Report?
The three biggest credit bureaus in the country announced in March 2022 that they are altering the way they include medical debt in a consumer’s credit history. Many consumers may see a difference in their reported score as a result of the elimination of over 70% of medical debt. However, if you are thinking about filing for bankruptcy, you must still let your lawyer know about this debt.
How will this affect your bankruptcy, then?
Understanding your secured and unsecured obligations is crucial for filing for bankruptcy. You might have issues down the road if you do not fully disclose everything in your bankruptcy. However, the majority of courts will dismiss or discharge your unlisted debt.
However, the absent creditor could be able to reopen your case in some jurisdictions as a “defrauded creditor” and seek payment for the unlisted obligation. If you are worried about a missing debt in your case, talk to your lawyer.
Do You Need More Details?
For a free consultation about your best alternatives for managing your medical debt, get in touch with our office if you reside in Los Angeles or Texas. If you reside outside of Los Angeles or Texas, please get in touch with a bankruptcy lawyer nearby to determine your best course of action. Without you having to do any thinking, an expert lawyer can guide you through each stage. To schedule a consultation, go to https://recoverylawgroup.com/