Medical Debt: #1 Reason to File Bankruptcy
Dec 18, 2014
Medical debt is the number one reason our office sees for bankruptcy filings. Even though people disagree on how to fix it, most people agree that the cost of healthcare is outrageous and difficult for the average household income to afford. A single medical issue can end up with multiples bills from different medical providers. Each one of these providers want a lot of money and they want it now.
Unfortunately, many households still do not have health insurance. Either, health insurance is not available through their employer or it is so expensive that they simply cannot afford it. Even worse, many individuals don’t have insurance because of loss of employment when a health crisis strikes.
Even families with health insurance are not immune to the cost of a health issues. Many health insurance plans have high deductibles and high co-pays that put a strain the budget. There are also the expenses incurred due to an illness that are beyond medical bills, such as missed work and travel expenses.
Whether you are back on your feet or not, the hospital expects payment. Many times calling and talking with the billing department gets you nowhere. They want more money each month than you can afford and they do not take into consideration the other health care provides want money too.
Just because your life has been largely impacted by a disease or injury doesn’t mean that the hospitals will give you a break. If they are not receiving their high monthly demand, they will bring you to court and garnish your wages. If making the monthly payments to all your medical providers was not difficult enough, try to do it with 20% less gross earnings.
It may seem like you are out of options. Don’t forget about bankruptcy. Bankruptcy was made to help people just like you get a second chance when the unexpected happens. A bankruptcy caused by a medical issue is nicknamed a “medical bankruptcy”. In a medical bankruptcy, the filer asks the court to discharge his medical bills and related debts but allow him to keep his secured loans, such as vehicle payments and home mortgages. As long a person can provide the court a budget showing they can afford their secured loans, the court will approve the request.
When to File
Something we tell our clients to keep in mind is whether their health issues are over resolved or if they will continue. Since bankruptcy only gets rid of debts incurred before the filing date, any debts incurred after are the filer’s responsibility. It does not make sense to file bankruptcy before the $5,000 MRI. Instead, finish the medical treatment, if possible, and then file for bankruptcy. This will ensure you are truly getting a fresh start.
If you have questions about medical bankruptcy, you should talk with an attorney to find out the advantages or disadvantages in your personal situation. Pedersen Law Office offers free consults in all of our areas of practice and will meet with you personally to discuss your specific circumstances and see what options are available for you. Our law office serves the communities of Appleton, Neenah, Menasha, Oshkosh, Green Bay and their surrounding areas.