No one is immune from a major health issue. You could have an accident that causes physical injury, develop a chronic illness, or be exposed to something harmful.
Unfortunately, even with health insurance, medical treatment can be costly. This is especially true if it is on an ongoing basis. Between paying premiums, deductibles, co-pays, etc., your medical expenses could range from thousands to tens of thousands of dollars.
That amount of debt is difficult to manage especially if your health condition affects your ability to work. Before you know it, you could get behind on your regular bills trying to keep up with your medical debt. This could make your financial health as tenuous as your physical health.
If you are overwhelmed by unexpected medical debt, bankruptcy could offer a solution to your problem.
Medical Debt and Bankruptcy
Millions of Americans file for bankruptcy each year. A majority of them cite needing relief from medical debt as a cause for filing for bankruptcy relief. But, many struggling with medical debt remain unaware of how bankruptcy relief could benefit them.
First, bankruptcy stops ongoing debt collection practices.
If you have outstanding medical debt, it could quickly go into collections. Once this happens you can expect to receive ongoing harassing communications from creditors. Medical creditors are known to aggressively collect by filing lawsuits in an attempt to garnish your wages. Judgments from the lawsuits also could result in liens on your property.
As soon as you file for bankruptcy protection, the law requires that your creditors immediately stop all debt collection practices for the duration of your bankruptcy. This court order, the automatic stay, means your creditors cease communication with you about paying your medical debt as well as halt any wage garnishments and liens or other collection actions.
Second, bankruptcy could help you eliminate your medical debt. How this gets accomplished depends on which chapter of bankruptcy you file.
Chapter 7 bankruptcy is known as straight bankruptcy. If you qualify for chapter 7 bankruptcy, your medical debt could get wiped out and discharged. This would mean you no longer have a legal responsibility for the debt. Creditors cannot bother you about it again.
Chapter 13 bankruptcy is known as a reorganization bankruptcy. If you qualify for chapter 13 bankruptcy, your debts will get restructured into an affordable monthly repayment plan. Your monthly payment is usually determined by your ability to pay which takes your income and expenses into account. Your repayment plan typically lasts between three and five years. At the end of the repayment period, any remaining debts are discharged. Even though you have to repay the debts, you often do so at a reduced rate.
Getting Help with Medical Debt Bankruptcy
If unexpected medical debt is affecting your financial health, you should seek help. Dealing with an unexpected health issue is bad enough without having additional financial stress. An experienced bankruptcy attorney will know how to help you recover from unexpected medical debt and get a financial fresh start.
Brock & Stout’s bankruptcy attorneys have been helping those in Alabama burdened by medical debt for over 20 years. Contact us today for a free evaluation of your financial situation to see if we can help you.
Reviewed by: David G. Poston