Modern medical facilities have incredible capabilities. They can take images of people’s brains and obtain samples to genetically sequence tumors. They can save people’s lives after a gunshot or a car crash. Unfortunately, that impressive standard of care comes with a huge price tag.
Even people with insurance may end up struggling with medical debt because of coinsurance responsibilities, high deductibles or care received from an out-of-network provider in an emergency. Those without insurance may experience profound sticker shock because of medical pricing practices. When patients cannot fully cover or pay for their treatment quickly, they may find themselves facing financial hardship.
Medical creditors can quickly become aggressive
While people may expect compassionate treatment from a health care provider or hospital, they may find themselves facing shockingly aggressive collection efforts. Many hospitals and similar facilities have entire departments that focus on securing payment from patients. Medical businesses also frequently turn over accounts to collection organizations.
People with large medical debts may soon find themselves at risk of litigation that could result in wage garnishment or a lien against their home that endangers their equity and ownership rights. When people begin falling behind on payment arrangements or when a medical creditor threatens to take them to court, it may be necessary to consider a bankruptcy filing.
How does bankruptcy help?
People who can’t make payments on medical debts, possibly because they can’t work because of their health, are at risk of a judgment that can put even more pressure on their finances. However, it is possible to prevent a medical creditor or collection company from securing that judgment by filing for personal bankruptcy.
A pending lawsuit is subject to dismissal under the automatic stay granted when people file. Medical debts not secured by liens are typically eligible for discharge in a successful bankruptcy filing. People who file Chapter 7 bankruptcy may be able to discharge their debts in a matter of months.
Those who file for Chapter 13 bankruptcy can negotiate a repayment plan that lasts for between three and five years and fits within their budget. They can then discharge the remaining balance on their eligible medical debts after completing that plan.
Recognizing that medical debt can lead to both financial hardship and health-damaging stress may help people overcome their aversion to bankruptcy. A personal bankruptcy filing can help people take control of their finances and move past overwhelming medical debt.