Despite the best-laid financial plans, an unexpected medical illness can wreak havoc on finances. Paying medical bills can exhaust Arizona residents both financially and physically and they may not be aware of their options in the face of overwhelming debt.
Declaring bankruptcy, either Chapter 7 or Chapter 13, may be one of the only ways to overcome financial challenges and wipe out many bills, including medical bills.
At a time when there are more underprivileged Americans than at any other time in the country's history and more and more people living longer yet sicker lives, medical bills play a role in more than 60 percent of personal bankruptcies across the country, according to a report published in The American Journal of Medicine.
The most common form of bankruptcy is Chapter 7, also known as liquidation bankruptcy. It is likely most common because it provides filers with a fresh financial start. It is known as liquidation bankruptcy because a trustee will sell some of a filer's assets and apply the proceeds toward certain debts. However, Arizona residents should rest easy because they may be able to retain possession over their residential home, car and retirement plans, up to a certain financial limit. In addition to this, they get to keep most of their household possessions.
What filers do get rid of is most of their debts and ongoing harassment by creditors. In addition to this, when filers are facing foreclosure proceedings, bankruptcy puts an automatic stay on those proceedings.
In order to qualify for Chapter 7 protection, filers need to pass a means test, proving that their income falls within a certain limit mandated by law. Arizona residents who are facing financial difficulties should be aware of the options open to them. Rather than strain their health by worrying about their bills, they can consider filing for bankruptcy protection to regain their financial and mental health.
Source: Albany Tribune, "Inequality and Poverty America Style: In richness and in health," Graham Peebles, Dec. 6, 2012