The Truth Behind Medical Bankruptcy
Bankruptcy takes place when a person legally declares his full inability to pay off all his/her financial obligations. The exact processes involved in legal bankruptcy vary based upon the region, state or country where a person lives. It primarily involves allowing a person to make arrangements to have all his financial obligations pardoned. However, the pardon will only be given in exchange for surrendering personal and valuable possessions or agreeing to some form of payment arrangement. One reason behind experiencing total bankruptcy is medical bankruptcy. This usually happens when a person can’t pay medical bills resulting from severe injuries and illness.
Medical Bankruptcy Explained
Filing for medical bankruptcy is extremely popular in countries without healthcare and medical services sponsored by the government. Medical bankruptcies triggered by failure to settle medical bills on time affect almost two million people yearly. This makes healthcare and medical services among the top reasons for outpacing and filing for bankruptcy. It is because hospitalization, buying costly medicines and undergoing expensive therapies might cause people to incur huge credit card bills. With this fact, it is no longer surprising why medical bills and bankruptcy are often tied together.
The close connection between bankruptcy and medical debt are now part of various conversations in the US. The reason behind this is that thousands of people in the US have already become a victim of huge medical debts. Some of them have a hard time battling their huge financial troubles. This results in the increase in the number of people who file for bankruptcy because of medical bills.
While it is understandable for many Americans to feel compelled to file for bankruptcy on medical bills, one should still realize that it is not the best answer to dealing with mountainous medical debt. Remember that there are also disadvantages to declaring bankruptcy due to medical bills. These downsides are too severe that the person who declares it might be greatly affected for the rest of his life.
Understanding the Treatment of Medical Bills in Chapter 7 Bankruptcy
Under Chapter 7 bankruptcy, medical bills are viewed as non-priority and unsecured debts. What this means is that your medical bills will be incapable of receiving priority if the trustee has the capacity of making payments to creditors. Note that under this case, even if your filed medical bills bankruptcy results to paying a part of your total obligation, the remaining amount will still be wiped out upon receiving your discharge. With this fact, Chapter 7 bankruptcy becomes the easiest solution for those who wish to relieve their financial struggles especially after realizing that they can’t afford medical bills.
It is also crucial to note that while there are no limits on the amount that can be discharged under Chapter 7 bankruptcy, it is still necessary to be qualified for it. Qualifications include passing the disposable income means test. However, filing bankruptcy on medical bills is not still possible under Chapter 7 even after passing the means test for people who have substantial amounts of an asset.
Helpful Tips in Avoiding Medical Bankruptcy
While the answer for those who ask can medical bills be filed in bankruptcy is yes, note that avoiding it is still better than immediately deciding to declare bankruptcy. Fortunately, there are a few ways to avoid filing bankruptcy due to medical bills, and one of these is to be familiar with your insurance policies. Gather information about all your insurance policies including those that work for short-term and the long-term and your health and life insurance.
Memorizing the terms of your insurance contracts, and fighting any suspicious charges are valuable in preventing the risk of filing for medical bills in the future because of your difficulty paying all of them. This is crucial in determining the exact coverage of your insurance, thereby allowing you to file for claims whenever necessary. This minimizes your financial struggles because of your huge medical bills.
Another tip is to avoid ignoring your medical bills. At A1 Debt Solutions, we encourage you to remember that these bills will never go away by simply ignoring them. Work hard to settle them little by little, instead of allowing the bills to pile up. Note that once your bills pile up, you may have an extremely hard time settling them which might result in the need to file for medical bill bankruptcy in the end.
Communicating with the hospital or your physician can also help. This is possible by contacting the right person in the billing department of the hospital. Try to negotiate. Be honest when explaining your present financial condition. Doing the negotiation as soon as possible is crucial in quickly preventing the need for people to file for bankruptcies due to medical bills.
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