Medical expenses or unpaid dues can be one of the most uncontrollable reasons to file for bankruptcy. It is unfortunate and very harsh to have to file a medical bankruptcy. If bankruptcy is due to financial mismanagement, it is something that can be fixed as it is something which controllable and something that is due to a mistake. However, medical bankruptcy isn’t the same thing. It for sure makes bankruptcy a good thing and helps an individual suffering from financial and health trauma-free. Know more about bankruptcy at https://www.recoverylawgroup.com/bankruptcy/.
Not often cause of bankruptcy is highlighted and hence it is extremely difficult to identify the right reason for bankruptcy as per stats. It can’t be denied that a good percentage of bankruptcies filed in the US today as well indicate the high cost of medical expenses. In most scenarios, the medical, doctor, and other expenses run to several thousands of dollars. This is not only the cause of concern for people who are not protected by a medical insurance but also for people with medical insurance as well. Sometimes, the coverage provided by the medical insurance company isn’t enough, or there is a delay in processing, or it could be out-of-pocket expenses that have eventually created new debt.
Also, many poor people can’t afford medical insurance as it can be too costly. Due to various aspects, the premium could be as high as $20k per family in many situations, which is certainly beyond affordability for many families. As per many researchers, over 60% of bankruptcy cases were accounted for the medical reasons. And as per the debt discharge numbers, billions of dollars of medical debts get discharged almost every year in the United States. Unlike education loans, child security, alimony, and other payments, it is extremely satisfying to have medical expenses under the dischargeable debt category in both chapter 7 and chapter 13 bankruptcy.
When not to consider bankruptcy to discharge medical debts-
- If you are behind on some of the non-dischargeable debts like secured debts, alimony or child support, mortgage, etc., you might consider avoiding bankruptcy to discharge medical debts.
- Medical debts with the hospitals can be re-negotiated on favorable grounds much more easily compared to other lenders. Hence, filing for bankruptcy only with medical debts might not be a great idea.
- Another important consideration is with respect to the credit score. A medical debt might not impact or degrade your credit score in most circumstances. However, if you apply for bankruptcy to discharge the same, the same can damage your credit score significantly.
- The other good thing with the medical debts especially some of the federal or government hospitals is that they provide ample time and do not follow up aggressively for the debts to be cleared. Also, some agencies would just issue a bill and you can pay the dues as and when you can.
If you have a large number of unsecured and dischargeable debts that medical debts are just a part of, bankruptcy becomes the last option. To understand what is beneficial in your financial situation, book an appointment with some of the most experienced attorneys across Los Angeles & Dallas, TX at 888-297-6203 now.