How Bankruptcy Can Help with Medical Debt

Some people have very little debt until they or a household member is diagnosed with a serious illness or injury. No matter how responsible you are with your financial management, few people can budget for extensive and unexpected medical bills. Even with health insurance coverage, medical costs can pile up quickly, and many households do not have the means to pay these bills. 

Some people try to cover medical debt with credit, which can only make the problem worse. Even then, credit cards often only cover a portion of medical debt, and then they face credit card payments in addition to medical bill payments. In short, medical conditions can cause serious financial problems very quickly that can soon become insurmountable. 

Financial Problems Due to Medical Conditions

If you need medical treatment due to an injury or illness, you often have no choice but to receive that treatment – no matter what the cost. In many situations, you receive treatment first and worry about how to pay for it later. This is especially true if your child is the one in need of treatment. 

Even if you have insurance, deductibles, coinsurance, copays, and other out-of-pocket costs can add up quickly, and most people are unaware of how much they owe until they later receive the bills from medical providers. If they cannot pay the bills, they can be sold to debt collectors, who can report non-payment to credit bureaus. Often, people might try to pay for medical bills with loans or credit cards – even though this type of debt charges interest when medical bills have no interest. They might be trying to avoid negative credit effects, but they might make the situation worse. 

To make matters worse, medical conditions and treatment can keep you or a spouse out of work. This means that in addition to accruing bills, you are also losing income. This can make it difficult to cover household bills and expenses, and you might rely on credit during this time to get by,

How Bankruptcy Can Help

Medical debt is one of the top reasons why consumers file for bankruptcy. In Chapter 7 bankruptcy, there are two categories of unsecured debts – priority debts, which are nondischargeable, and nonpriority debts, which can be discharged as part of the case. Fortunately, medical bills are considered to be nonpriority, so they can be wiped out if you file for Chapter 7 bankruptcy. Your credit cards that you might have used to pay for some of your medical costs and other expenses are also nonpriority debts. If your medical bills and related debts are largely causing your financial stress, a bankruptcy case might be able to set you up with a completely clean slate.

Contact a Northwest Indiana Bankruptcy Lawyer for More Information

Medical issues are often beyond our control, as is the debt that follows. At  Whitten & Whitten, we have seen how bankruptcy can help people with crushing medical debt. Contact us to speak to a bankruptcy attorney in Northwest Indiana today.