Medical Debt Is A Leading Cause Of Bankruptcy
Medical debt accounts for over half of all bankruptcy filings. Most of the people who file for bankruptcy because of medical debt had private health insurance at the start of their illness. If you find yourself in this situation, it is not your fault — and bankruptcy may be your best option.
If you have a lot of medical debt that you are having trouble paying off, many medical service providers and hospitals are often willing to cut a large percentage of the bill and accept partial payment of the outstanding balance. Further, if you used your credit card to pay your medical bills, you may qualify for a debt management plan, which will allow you to pay down the debt over time.
In most other cases, however, bankruptcy will be your best option. However, it’s important to know that if your medical treatment is still ongoing, you should wait until it is over before filing for bankruptcy. Otherwise, you will have to pay any medical bills incurred after your bankruptcy filing. Should you decide on bankruptcy, you have two options available:
- Chapter 7 bankruptcy — in which your assets will be liquidated to pay off your debts. Your medical bills will be treated like other forms of unsecured debt, such as credit card debt. In other words, your medical debt will be completely wiped out or discharged.
- Chapter 13 bankruptcy — also known as reorganization, in which a plan is devised for you to repay all or a portion of your debts over a period of three to five years. Secured debts, like a car loan or a mortgage, are paid off first under the plan, followed by debt like taxes and child support. Unsecured debt like medical bills and credit cards will come last. Any debt remaining after completion of the plan is usually discharged.
If you have incurred medical debt, it is not your fault. Take care of your health first, complete your treatment, and then work with knowledgeable Pennsylvania consumer bankruptcy attorneys to help you get a fresh start.