The cost of medical care continues to rise and the inevitable result for countless individuals and families is financial ruin. Despite all the talk of sweeping changes in legislation and universal health care for all, there is currently little or no relief for many of these people. Fortunately, there is a way to get out from underneath crushing medical debt.
In nearly all cases, filing bankruptcy will eliminate medical debt. When deciding if bankruptcy is the best way to deal with your medical bills, timing is the most crucial element. Since medical issues are unique to each person, the best advice is to consult a qualified bankruptcy attorney in your area.
Generally, during an initial consultation, the attorney will determine, first, whether your situation warrants bankruptcy and, second, which type of bankruptcy best fits your circumstances. The two most common types of bankruptcies individuals can file are Chapter 7 and Chapter 13.
In Chapter 7 bankruptcy, medical bills are typically discharged and you will be relieved from your overwhelming medical debt. Once the bankruptcy petition is filed, all billing departments for medical providers must stop calling you, writing you, or taking any other steps to collect a debt from you. If the medical provider has assigned or sold the debt to a collection company, the collection company must also stop all attempts to collect the debt.
Medical bills in Chapter 13 bankruptcy are treated similarly to the way they are treated in Chapter 7 bankruptcy, in that medical providers and debt collectors must not engage in any attempt to collect the debt. Additionally, debtors are prohibited from reporting to a credit agency or contacting third parties regarding the debt.
Bankruptcy Can Be Used to Release Liens
Finally, if you have been sued by a medical provider or a debt collector for medical bills and a judgment has been entered against you, you need to know that the judgment functions as a lien against any real estate you own. This can affect your ability in the future to sell your property or refinance an existing loan. This lien can be “avoided” inside a bankruptcy. In other words, the bankruptcy judge has the power to make the lien go away forever. All judgments, including judgments for medical bills, can also cause your wages to be garnished and/or your bank account to be frozen. If this has already happened to you, you should seek legal counsel immediately. If this hasn’t happened yet, seeking legal counsel right away can prevent it..
Medical bills can be discharged under a chapter 7 bankruptcy and chapter 13 bankruptcy.
Due to the nature of medical care, each person’s situation is unique and you should consult an attorney immediately if you are considering bankruptcy.
Filing for bankruptcy will stop all collection activity and give you a fresh start.
If you have been sued and a judgment has been entered against you, the judgment serves as a lien against real estate.
If a judgment has been entered against you, your wages and bank account are subject garnishment.
Contact a bankruptcy attorney to discuss your options and how bankruptcy can help you get out from under your medical debt. Remember, medical debt causes more than 60% of all bankruptcies. You are not alone.
Sam Marks graduated from Drake Law School after completing undergraduate work at the University of Iowa. After passing the bar, he developed a general law practice that included work in criminal, family and juvenile law. As time passed, he began focusing specifically in the areas of bankruptcy and consumer protection. Sam is frequently asked to provide lectures to attorneys, business professionals and the public on the topics of bankruptcy and consumer protection and how these issues affect other aspects of the law. He enjoys these presentations and the opportunity they provide to discuss current events the legal system.