Whether it's cosmetic surgery, elective orthopedic procedures, or fertility treatments, the financial impact can be overwhelming. Patients might assume that since these surgeries are not medically necessary, the associated debts might not be eligible for discharge through bankruptcy. However, many people are unaware that bankruptcy law typically treats all medical debt similarly, regardless of the reason for the medical service.
What Is Considered an Elective Medical Procedure?
An elective medical procedure is any surgery or treatment a patient chooses to undergo, rather than one required to address an immediate medical emergency. These procedures are often planned and can range from cosmetic enhancements to non-emergency surgeries that improve quality of life.
While elective surgeries are not medically necessary to preserve life, they can still have significant physical and emotional benefits.
Examples of Elective Medical Procedures:
- Cosmetic surgery: Procedures like breast augmentation, rhinoplasty, and liposuction.
- Orthopedic surgeries: Knee or hip replacements for non-urgent joint issues.
- Fertility treatments: Procedures such as in vitro fertilization (IVF).
- Weight loss surgery: Gastric bypass or lap-band surgery for obesity management.
- Dental procedures: Cosmetic dental work, including veneers or teeth whitening.
- Vision correction: LASIK surgery to improve eyesight.
- Elective C-section: A scheduled cesarean section without a medical necessity.
- Tonsillectomy: Removal of tonsils when not medically necessary.
- Elective cardiovascular procedures: Non-urgent procedures like elective angioplasty.
Elective surgery can be important for an individual’s well-being and quality of life, but the financial strain can be life-altering. Bankruptcy might be the solution that allows a fresh start, yet it's important to understand how medical debt, particularly from elective procedures, fits into the bigger picture of debt relief.
Requirements for a Chapter 7 Bankruptcy Discharge
Most people who wish to get rid of medical debt file for Chapter 7 bankruptcy, which can discharge all consumer debts. However, not everyone qualifies for Chapter 7, and there are specific requirements that must be met to receive a discharge. It’s important to consider your eligibility when assessing your options for medical debt relief.
The Chapter 7 Means Test
The debtor must pass a means test, which compares their income to the median income for a household of the same size in their state. If the debtor's income is below the median, they automatically qualify. If it is above, they must complete additional calculations to determine if they can still qualify based on their disposable income.
Credit Counseling
Before filing for bankruptcy, the debtor must complete credit counseling from an approved agency within 180 days of filing. This requirement ensures that the debtor has considered other options before resorting to bankruptcy.
Income & Expenses Disclosure
The debtor must provide complete and accurate documentation of their income, expenses, assets, and liabilities. This includes submitting recent tax returns and pay stubs. The court uses this information to determine eligibility and to ensure that all debts are properly addressed.
No Previous Bankruptcy Discharges
The debtor can’t have received a Chapter 7 discharge within the past eight years or a Chapter 13 discharge within the past six years. This prevents abuse of the bankruptcy system by filing multiple times in quick succession.
Asset Liquidation
In Chapter 7, the debtor's non-exempt assets may be liquidated to pay creditors. The debtor must cooperate with the bankruptcy trustee, who manages this process. However, many states offer exemptions that protect certain assets, such as a primary residence or a vehicle, from being sold.
Non-Dischargeable Debts
Certain types of debts, such as student loans, child support, and most tax obligations, are not dischargeable under Chapter 7. The debtor must continue to pay these debts even after bankruptcy.
Honest Disclosure
The debtor must honestly disclose all assets and liabilities. Attempting to hide assets or committing fraud can result in the denial of a discharge and potential legal consequences.
Using Chapter 13 to Deal with Medical Debt
Chapter 13 bankruptcy provides a structured way to manage and eventually discharge medical debt, along with other types of unsecured debt. Unlike Chapter 7, which offers an immediate discharge of eligible debts, Chapter 13 involves reorganizing debts into a manageable repayment plan. This option is particularly beneficial for individuals who have a steady income but are overwhelmed by their debt load, including substantial medical bills.
Under Chapter 13, medical debt is grouped with other unsecured debts like credit card balances and personal loans. The debtor proposes a repayment plan to the bankruptcy court, typically lasting three to five years, where they make regular payments based on their income and expenses. These payments are distributed among creditors, including those owed for medical treatments.
Any remaining unsecured debt, including medical bills, may be discharged at the end of the repayment period, providing the debtor with a fresh financial start. This can be especially helpful for those facing large medical debts that would be difficult to pay off in full.
Chapter 13 offers a flexible solution for dealing with medical debt, especially for individuals who don’t qualify for Chapter 7 due to higher income levels or those who wish to protect certain assets.
Contact Us for Legal Assistance
If you’re facing overwhelming debt, including medical bills or other financial challenges, seeking legal assistance can be the first step toward relief. Our experienced team at Buchalter & Pelphrey understands the complexities of bankruptcy law and is here to guide you through each step of the process.
We offer personalized legal advice tailored to your specific circumstances, ensuring that you understand your rights and the potential outcomes of your case. Our goal is to help you find the best path forward, whether that means eliminating debt, protecting your assets, or negotiating with creditors.
Contact us now to take the first step toward reclaiming your financial future.