Should I Delay Bankruptcy If I Will Be Incurring New Debt
Since you would only be able to discharge debts that have been included in your bankruptcy petition, it may be in your best interest to delay your filing if you know that you will be incurring new medical debt in the near future. This will help you to ensure that you are not saddled with additional debt after completing the bankruptcy process.
If you are unable to hold off any longer, for whatever reason, it is important to note that you have the option tofile for bankruptcy a second time if necessary. Depending on the chapter that you file under, however, you may be required to wait anywhere from 2 to 8 years before you can file again. That being said, you should not hesitate to weigh your options before filing.
Impact On Your Healthcare Services
Chapter 7 bankruptcy can also affect your relationship with your doctor or make it more difficult to get medical treatment. Legally speaking, hospital emergency rooms are required by law to treat patients regardless of their ability to pay. But you could be denied care at a doctors office due to unpaid bills. Some people elect to pay medical debt even after filing bankruptcy to maintain a relationship with their doctors.
Do You Lose Your Doctor After Discharging Medical Debt
The relationship between a doctor and their patients is an important one and many people are hesitant to file bankruptcy for medical debt because they do not want to lose their doctor. Although hospitals are prohibited under the law from denying care to a patient because they cannot afford to pay for the treatment, the same does not hold true for discharging medical debt through bankruptcy. If you discharge medical debt through bankruptcy, your doctor can use that as a reason to no longer treat you as a patient.
What Percentage Of Bankruptcies Are Medical
- Medical debt is both a direct and indirect cause of bankruptcy in a substantial number of cases.
We dont know how many bankruptcies are caused by medical debt. Medical debt bankruptcy numbers will fluctuate from year-to-year, influenced by factors like economic variables, political policy shifts, etc. During the debates over Obamacare, health care reform advocates suggested that more than half of all bankruptcies in the United States were caused by medical bills. Numerous studies have refuted that statistic. They argue instead that medical debt is a modest but rising component of debt in consumer bankruptcy. Regardless, there is little doubt that bankruptcy due to medical bills is a serious problem in the United States.
Myth And Measurement: The Case Of Medical Bankruptcies
During the push to pass the Affordable Care Act, President Barack Obama often described the crushing cost of health care that was causing millions of Americans to live every day just one accident or illness away from bankruptcy and repeatedly stated that the high cost of health care causes a bankruptcy in America every 30 seconds. Stories of illnesses and injuries with financial consequences so severe that they caused households to file for bankruptcy were used as a major argument in support of the 2010 Affordable Care Act. And in 2014, Senators Elizabeth Warren and Sheldon Whitehouse cited medical bills as the leading cause of personal bankruptcy when introducing the Medical Bankruptcy Fairness Act, which would have made the bankruptcy process more forgiving for medically distressed debtors. But it turns out that the existing evidence for medical bankruptcies suffers from a basic statistical fallacy; when we eliminated this problem, we found compelling evidence of the existence of medical bankruptcies but discovered that medical expenses cause many fewer bankruptcies than has been claimed.
Our study was based on a random stratified sample of adults 25 to 64 years of age who, between 2003 and 2007, were admitted to the hospital for the first time in at least 3 years. We linked more than half a million such people to their detailed credit-report records from the period between 2002 and 2011. The scatterplot shows the results of our analysis.
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Keep In Touch With Your Collection Agency And Credit Reporting Agency
Once you get passed on to a collection agency, expect to receive a ton of calls from an agent. Do not ignore them. Pick up the phone and negotiate a payment plan. Make sure they understand you want to pay the bill. Most importantly, be honest about what you can afford and how long you want the payment to last. Make it a point to talk to your credit reporting agency as well. Once a debt is paid off, verify that it has been removed from your credit report.
Jennifer Streaks is a financial and consumer news journalist who has written for The Huffington Post, Motley Fool and Black Enterprise and been featured on ABC, MSNBC, FOX Business and HuffPost Live, discussing money, business and consumer news. Find her on Twitter .
How Do I File For Medical Bankruptcy
- Although medical bankruptcy is not a form of bankruptcy relief, medical debt can be discharged through a filing of Chapter 7 or Chapter 13 bankruptcy.
You cant specifically file for medical bankruptcy. Nowhere on the bankruptcy paperwork does it require the debtor to specify the reason for filing bankruptcy. However, bankruptcy can still be a solution to your medical bills crisis. Unpaid medical bills eventually turn into medical debt. Medical debt is dischargeable via bankruptcy. Those who wish to file for bankruptcy resulting from medical debt may do so through either Chapter 7 or Chapter 13.
In Chapter 7, you can discharge your medical debt after the court liquidates your non-exempt assets. In Chapter 13, your medical debt is discharged after the completion of a three- to five-year repayment plan. The two chapters have different eligibility criteria; your income and other factors may play a part in determining whether you qualify for Chapter 7 or Chapter 13.
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Is There Any Such Thing As A Medical Bankruptcy
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Medical Bills: Impact On Your Credit
But the consequences of medical bills dont just end there. Mounting medical bills can do more than just create current stress. They can also impact your future by significantly impacting your credit score.;
Its important to remember that any unpaid medical bill can be turned over to a collection agency. In other words, that debt can be sold to someone else to collect. Then the unpaid bills can be reported by the collection agency.; These bills and their amounts will appear on your credit report. And even just one bill going into collection can cause your credit score to drop anywhere between 50 and 100 points.;
And once on your credit report, these delinquent bills dont go away anytime soon. An unpaid medical bill can stay on your credit report for up to seven years from the time of the original delinquency date.;
Some credit report agencies may not report medical collections until they are 180 days past due, allowing for a grace period for consumers to pay down any bills, create a payment plan, or resolve any disputes related to medical billing. And some credit score tabulations will not include any medical debt once a medical bill is paid. But again, this all varies by agency and formulas used.;
Ask About Assistance Programs
Most hospitals have assistance programs that, if you qualify, will give you free or reduced hospital care, depending on your level of income. For instance, in some states, the Hospital Care Assurance Program will cover expenses for medically necessary services. Also, non-profit hospitals that enjoy federal tax-exempt status might have to go easier on you and other cash-strapped patients when it comes to medical billing. This might apply to you. You should contact your hospital’s financial aid counselor to find out more information and apply for applicable coverage.
To learn more about these and other options, see Managing High Medical Debts.
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Filing Chapter 7 Bankruptcy For Medical Debt
Chapter 7 is a fairly straightforward process that will last approximately four to six months. If you are successful with your case, your debts will be discharged and forgiven. You may not be able to discharge all your debts in bankruptcy. While you can typically discharge medical debt and credit card debt, expenses such as child support and alimony are typically not dischargeable.
If you want to keep certain property that is considered secured debt, such as your home or vehicle, you will have to continue to make payments after the bankruptcy case is final. You may be able to keep the property if an exemption applies to it. If you have assets that are not considered exempt, a trustee will seize it. The assets are then sold and the proceeds of the sales are used to repay the creditors. Although the law does allow for this process, it rarely happens. Property is only seized in approximately five percent of bankruptcy cases.
Not everyone filing bankruptcy qualifies for Chapter 7. To qualify, you must pass a means test which involves calculating your family income and all of your expenses. You will qualify if your income is less than the average income in South Florida, after your necessary and reasonable expenses are deducted. If your income is higher than the average income, you will have to file Chapter 13 bankruptcy to manage your medical debt.
Do You Have Debts Other Than Medical Bills To Eliminate In Bankruptcy
If all you have to wipe out is medical debt, that’s perfectly fine. But knowing you can get rid of other bills could help tip the balance in favor of bankruptcy. Here are examples of dischargeable debts:
- back rent or lease payments
- gym and other memberships
- personal and payday loans, and
- mortgages, auto loans, and other secured debt .
Not all obligations can be erased in bankruptcy, however. For instance, you’ll remain responsible for nondischargeable debt, like domestic support obligations, recent income tax debt, and student loans .
You can eliminate all of the same debts in Chapter 13 as in Chapter 7, but Chapter 13 lets you discharge a few more obligations. And it offers benefits not available in Chapter 7 .
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Will Chapter 7 Bankruptcy Eliminate My Medical Debt
If you have acquired a significant amount of medical debt, it may be in your best interest to file forChapter 7 bankruptcyas this process would allow you to discharge most, if not all, of your unsecured debt over a short period of time. Once you have liquidated your non-exempt assets and used the proceeds to repay your creditors, the court will order a discharge of all remaining debts. This, in turn, would free you of the legal obligation to repay them.
Known as “fresh start” bankruptcy, Chapter 7 is often the most practical way to rid yourself of overwhelming medical debt once and for all. If you do notqualify for this chapter, however, you should not hesitate to consider the possibility of Chapter 13.
Hire A Billing Advocate
If you’ve tried and tried and still haven’t made any significant headway, consider hiring a billing advocate. For those that are inundated with medical bills maybe after a long illness or surgery; a billing advocate can sort through your bills and negotiate on your behalf. Advocates typically charge $100 to $500 an hour, so choose someone with a rate that makes sense based on the amount of debt you need to pay off.
Is There Such A Thing As Medical Bankruptcy In South Florida
No. Medical bankruptcy is not something that actually exists, even when you are trying to discharge medical debt during the process. This means that when you file bankruptcy to discharge medical debt, you cannot limit your case to avoid paying those bills alone. The bankruptcy laws of the state and country are intended to be as fair as possible to both you the consumer, and the creditor that will likely not recover the full amount of debt you owe.
In bankruptcy, medical debt is treated the same as credit card debt, personal loans, and utility bills under the bankruptcy code. Due to this, if you are filing bankruptcy as a result of medical bills you cannot pay, you can also discharge your other unsecured debts, as well. During the bankruptcy process, you must list all of your personal property, real estate, as well as your debts.
You must also list every household expense you are currently facing, and provide full disclosure about the income of your household. This is true even if your spouse does not file bankruptcy with you. You will also likely have to provide any information about debts you have recently paid, and any transactions such as property sales or transfers you have recently engaged in. All of this information is required, along with your medical debt, when filing bankruptcy.
Is Medical Debt Discharged In Chapter 13 Bankruptcy
WhileChapter 13 bankruptcy will not eliminate your unsecured debt as quickly as Chapter 7, it is still a viable option for those who are unable to get out from under their medical debt. Rather than receiving a discharge of debt within 4 to 6 months of filing, as would be the case in Chapter 7, Chapter 13 would allow you to develop a repayment plan that could be executed over 3 to 5 years. As long as you follow the decided guidelines of your bankruptcy plan, you should be able to receive a discharge of all remaining debts once the process has been concluded.
Unlike Chapter 7, which requires debtors to pass ameans test, Chapter 13 bankruptcy is available to all consumers who have run into financial trouble.
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Our Bankruptcy Attorneys In South Florida Can Help With Your Medical Debt
If you have incurred a high amount of medical debt, our South Florida bankruptcy attorneys at Loan Lawyers are here to help. We will advise on your case, help you determine which type of bankruptcy is right for you, and guide you through the entire process so you have the best chance of a favorable outcome. Call us today at or contact us online to schedule a free consultation and to learn more about how we can help.
Is This The Right Time To File A Bankruptcy
If you file a Chapter 7 case that is successfully discharged you are unable to file another Chapter 7 and receive a discharge for 8 years. While it is impossible to predict upcoming unexpected financial difficulty, you should still think about your current level of debt as you try to decide if filing a case now is worthwhile.
It is also important to consider if there is significant financial strain on the horizon, such as a medical issue that may prevent you from working for the foreseeable future. Remember that while bankruptcy can be an important remedy the best scenario to file is when the discharge of debts will resolve your financial difficulty and set you up for success going forward.
Can I File Bankruptcy On Medical Bills Alone
Many consumers find themselves drowning in medical debt and wonder can bankruptcy be filed for medicals bills without including other debt such as credit cards and other accounts.; You can file bankruptcy for your medical bills but it is unlikely youll be able to file without including other debts.
While bankruptcy may allow you to wipe away debt or restructure it with a payment plan, the process also allows for creditors to be treated fairly.; Its one thing for you to choose who gets paid when you pay bills each month and you may feel some obligations more worthy than others, but in bankruptcy court it may not seem fair that you want to pick and choose certain debts and creditors when they are all entitled to receive payment.
Upon filing for bankruptcy, all unsecured debt would be listed.; This includes medical bills, back taxes, credit card debt, personal loans and etc.; Since the debts previously mentioned fall under the same category they would be treated fairly by the court.
Something else to consider when filing bankruptcy is which chapter to file.; You may qualify to file one chapter over the other.; If you are unable to make payments or dont earn enough to pay on what is owed, Chapter 7 may be the best option.; Chapter 13 allows you to repay debt under a structured payment plan within a certain time period.; Discuss with a bankruptcy attorney about meeting necessary qualifications for filing.