How To Get Rid Of Credit Card And Medical Debts

Studies show that medical expenses are one of the primary reasons that people file for bankruptcy nationwide. Health care costs can be exorbitant, even with adequate health insurance. An unexpected trip to the hospital can quickly drain your bank accounts and put you behind on all your other bills.

Likewise, credit card companies go to great lengths to encourage cardholders to spend the maximum amount possible. Before you know it, interest and fees have escalated to unmanageable proportions.

Here’s the good news: It is possible to eliminate these medical and credit card debts. At Kennel Zeigler LLC, our attorneys have helped many people like you in Dayton and throughout Ohio regain their financial freedom. Let us make a difference for you, too.

The Trouble With Credit Card Debt

Credit card debt builds slowly, then all at once. Between interest rates, late fees and rising minimum payments, what started as manageable can quickly become impossible.

Creditors don’t just charge interest; they can take legal action. If you fall behind on payments, the attorney of your credit card company may file a lawsuit against you. If they win a judgment, they can garnish your wages or bank account. In some cases, they can place a lien on your property.

Bankruptcy stops these actions immediately. When you file, an automatic stay goes into effect, preventing creditors from pursuing collection or enforcing judgments.

With Chapter 7 bankruptcy, your unsecured debts are wiped out entirely. These include most credit card debts. With Chapter 13, you may repay a portion over time based on your income, but the remaining balance is discharged at the end of your plan.

You also gain relief from harassment. Once your bankruptcy is filed, creditors and debt collectors must stop contacting you. This protection allows you to move forward in peace while your case is resolved.

Medical Debt Is Different But Just As Dangerous

Medical debt isn’t like credit card debt. You don’t “choose” to get sick or injured – and often, the debt arises from emergencies. Because of this, the credit reporting rules for medical debt are more forgiving than other types of unpaid bills.

Federal rules require credit reporting agencies to wait 180 days before adding an unpaid medical bill to your credit report. This delay gives you time to resolve insurance disputes or billing errors. If insurance eventually pays the debt, it must be removed from your report. Still, if left unpaid, a single medical bill can drop your credit score by 50-100 points or more.

Unpaid medical debt often ends up in collections. Even nonprofit hospitals may turn your account over to a collection agency. Once it’s in collections, the debt can be harder to manage – and more damaging to your financial reputation. Collection agencies can call you, sue you, and tack on interest or fees.

Filing for bankruptcy stops this cycle. Both Chapter 7 and Chapter 13 bankruptcy can eliminate medical debt entirely or reduce it significantly. Unlike temporary payment plans or debt negotiations, bankruptcy provides long-term relief and legal protection from collection activity.

How Bankruptcy Affects Your Credit Compared To Unpaid Debt

Worried about what bankruptcy will do to your credit? That’s a common concern. But it’s important to compare the long-term consequences of bankruptcy to the damage caused by ongoing unpaid debt. Here’s what you need to know:

• Unpaid debt causes steady, long-term damage to your credit score: Every missed or late payment chips away at your credit. If accounts go to collections or are charged off, those marks can remain on your credit report for up to seven years. This is true even if you eventually pay them.
• Lawsuits and judgments from creditors can leave lasting scars: If a creditor sues you over unpaid credit card debt or medical bills, and wins a judgment, the judgment can remain on your record for years. It may also lead to wage garnishment or bank account levies, causing additional financial stress.
• Bankruptcy causes a short-term drop but provides a clean break: Yes, bankruptcy will impact your credit score initially. Chapter 7 bankruptcies can stay on your report for 10 years; Chapter 13 for seven years. But because it eliminates or reduces debt, it also stops the ongoing damage and allows you to rebuild.
• You can begin rebuilding credit immediately after bankruptcy: Many people start seeing offers for secured credit cards, credit builder loans or other financial tools shortly after discharge. Responsible use of these can help rebuild credit faster than you might expect.
• Most people are in a better financial position one year after filing: Because the debt burden is removed, filers often find themselves better able to budget, save and make timely payments. These factors quickly contribute to credit recovery.
• Bankruptcy provides peace of mind that unpaid debt can’t: Unlike the uncertainty of collections or lawsuits, bankruptcy provides finality. You know what to expect and you have a clear path to financial stability.

In short, bankruptcy is not a financial failure; it’s a tool for recovery. While it does affect your credit in the short term, the damage is often less severe than the continued impact of unresolved debt. Most importantly, it gives you a real opportunity to move forward.

What Debt Relief Options Are Available?

If you are eligible for Chapter 7 bankruptcy, you can completely eliminate your credit card and medical bills. You will no longer be obligated to pay them at all. If you file Chapter 13 bankruptcy, you may have to repay your creditors a fraction of the total, but it will still be significantly less than the original amount you owe.

While debt settlements might be an option, bankruptcy is almost always better for your financial situation. Visit our offices today to talk to a lawyer from our firm and learn about your options personally with an experienced bankruptcy attorney.

Are There Any Situations In Which These Debts Can’t Be Discharged?

If you intentionally make large purchases with your credit card immediately before filing for bankruptcy, it may look like a fraud, and this debt may not be dischargeable. Also, if you intentionally lied on your credit card application in order to gain credit, you may not be able to discharge the debts.

These situations, however, are quite rare. We always dedicate the time and attention necessary to understanding your case and offering the guidance you need to find relief.

To get a free consultation about your options, call Kennel Zeigler LLC today at 937-576-9991 or contact our lawyers online. We will respond promptly.

*We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.