Unexpected health crises and the exorbitant medical bills that often accompany them are one of the main reasons people are forced to declare bankruptcy. Medical treatment, especially when it is not covered in part or whole by medical insurance, may cost tens of thousands of dollars. Most people are unable to afford the payments associated with these treatments, eventually resulting in bankruptcy
If you are faced with overwhelming medical bills, you might have questions about how bankruptcy can help you. There are two types of personal bankruptcy: Chapter 7 and Chapter 13. The former discharges debt, while the latter establishes a repayment plan overseen by a bankruptcy court. Chapter 7 bankruptcy releases only debts not secured by real property, such as medical bills. Chapter 13 requires repayment of debts, but it extends the time in which a person has to repay the debts and ensures no additional interest is added to the payments. It also allows a debtor to continue living in his or her home. Both Chapter 7 and Chapter 13 bankruptcies might be an option if you are faced with medical debt.
Medical Bankruptcy is Common
The bankruptcy community is all too familiar with medical debt. At the turn of the century, it was reported that more than 325,000 personal bankruptcy filings were triggered by medical debt. Nearly 500,000 personal bankruptcies were affected in some way by medical debt, even when it was not the primary cause of filing. By the middle of the decade, medical issues were the second biggest factor in personal bankruptcy filings.
Unfortunately, even those making their best effort to pay their bills each month are unable to keep up with the crushing debt of medical expenses. The bills are so high and the creditors so demanding, there is no way an average person can maintain a clean payment history. Not to mention, if health is a factor, lost wages might also be adding to a person’s inability to pay his or her debt.
What Can You Do if Faced with Excessive Medical Bills?
Bankruptcy is an option for many. It provides an opportunity to pay back any debts owed over time without needing to worry about harassment from creditors and growing payments due to interest. Bankruptcy gives you time and flexibility, which can be especially important if you are facing both health and financial crisis.
If you are in need of bankruptcy counseling or a medical issue has left you drowning in debt, we can help. Contact the Law Office of Brian R. Lewis for information on how you can get a handle on medical bills and get your financial life back on track.