Bankruptcy Might Be the Best Medicine for Medical Debt

September 4, 2013 1:30 pm Published by

Worried about big medical bills, but worried more about what filing personal bankruptcy in Indiana might do to your credit?  Here at the Zuckerberg bankruptcy law offices, we’ve heard that fear expressed again and again. We understand.  But we need for you to think that one through more carefully.  After all, if you have no way of settling the debt, the creditor may pursue you for payment (if those collection calls haven’t already begun!).  Your good credit is going to take a hit anyway, since any collection action would appear on your credit report. Even worse, if that medical provider sues you and gets a judgment, your wages might be garnished.

How would it help for you to file individual Indiana bankruptcy? Let’s assume you don’t earn lots of money and that you have very little equity in your home and other assets.  Even if your medical bills are your ONLY big problem with debt, a Chapter 7 bankruptcy may be a good choice for you.  Since medical debt is an unsecured debt, it can be discharged through bankruptcy.

But, as my Columbus bankruptcy lawyer colleagues always reassures her clients, even if you don't qualify for Chapter 7 bankruptcy, you can file for Chapter 13 bankruptcy. You’ll then be paying back a portion of the medical debt through your three to five year debt repayment plan.  The rest might be discharged.

When I’m visiting with you by phone or in my Indianapolis bankruptcy law office, one thing I’ll want to find out is whether insurance can cover any part of what you owe. If you’ve already exhausted your coverage, I can still help you try to negotiate a settlement with each medical provider. You’d be surprised how many hospitals and other doctors discount or even waive their bills when patients are uninsured; you’d be even more surprised at how much weight it carries when you have an attorney negotiating on your behalf.

In a recent survey, NerdWallet Health found that medical bankruptcy accounts for majority of personal bankruptcies. Reporter Christina Lamontagne puts the truth out there: “In fact, medical bills are the leading cause of personal bankruptcy, a last resort after millions of families have drained their savings, maxed their credit cards and even refinanced their homes”. As a longtime debt consolidation lawyer, I still found myself shocked by NerdWallet’s estimates for 2013:

  • Over 35 million American adults will be contacted by collections agencies for unpaid medical bills.
     
  • Nearly 17 million American adults (ages 19-64) will receive a lower credit rating on account of their high medical bills.
     
  • Over 15 million American adults (ages 19-64) will use up all their savings to pay medical bills.
     
  • Over 11M American adults (ages 19-64) will take on credit card debt to pay off their hospital bills.


 “Medical bills can completely overwhelm a family when illness strikes,” concludes Christina LaMontagne, VP of Health at NerdWallet. Filing personal bankruptcy in Indiana may be the best alternative for many.   It may be time to worry about you and find out how to grab the lifeline bankruptcy in Indiana has to offer?

 

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This post was written by Mark Zuckerberg

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