Medical bankruptcies occur when an individual is unable to pay his or her medical expenses, which has grown more common in recent years as medical expenses have risen dramatically. Technically, there is no difference in the eyes of the law between medical bankruptcies and other bankruptcies. However, for individuals in heavy medical debt, a Chapter 7 bankruptcy is popular because medical debt is considered nonpriority general unsecured debt. In layman’s terms, these types of debts are typically discharged without any repayment in a Chapter 7 bankruptcy. This means the health provider will not get paid. Medical bankruptcies add to the administrative work and collection issues that many healthcare sites face.
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