Can You Clear Medical Debt in Bankruptcy?
Medical debt is never something you are fully prepared for or truly expect. You may have a good health insurance and still end up in a challenging situation. When a medical emergency hits your household, the obvious option is to use any financial resources you may have in order to keep your health and that of your loved ones in top condition.
Some people in Las Vegas and Summerlin may view filing bankruptcy as the last resort to clear their medial debt. Oftentimes, however, filing bankruptcy is the most effective or the only effective option to manage your overwhelming medical debt.
What is Medical Debt?
Medical debt is debt incurred by you due to health care costs and other related expenses. You see, no matter how you get yourself covered at times, accidents and injuries happen beyond your control.
Studies and research show that medical debt is one of the leading contributors to personal bankruptcy in the United States. Despite the shift in health care laws and policies over the years, medical expenses still pose as a major and constant problem for most people. One solution you could come up with to catch up with medical costs is to loan a certain amount of money, and paying it slowly overtime with interest, that puts you in a situation of incurring more debts with a limited capacity to pay. Or you probably would pay your medical debt using your credit card that comes with a higher interest rate putting you in a more difficult financial situation of paying off your debt with another debt.
What NOT To Do in Order to Avoid Medical Debt:
Faced with medical debts, Las Vegas and Summerlin residents may resort resort to:
- Skipping their medication: This desperate measure will eventually take the worst toll on your health in the future. Prescription medicines could be costly, especially if the medicine prescribed is uncommon. People may opt to stretch the prescription before refilling or not taking the prescription at all.
- Skipping doctor appointments: Depending on the severity of medical or health condition, people may be recommended to see a doctor on a weekly, bi-monthly or monthly basis. Paying doctor’s fees can be burdensome. Being on the verge of bankruptcy, you would rather not see your doctor according to the advised frequency, especially if you could still feign to yourself that you are still alright. This coping measure would put your health in more danger as time goes by.
- Self-medicate: You make whatever is available in your medicine counter work for you even if you do not know the effect it will have on your health just to avoid spending money for a visit to your doctor and your doctor giving you prescription medicines that are not items in your prescription before.
- Denying your medical condition: Sometimes, it would be easier to deny that you have a medical condition so you wouldn’t have to face the reality of doctor visits and getting a prescription that would definitely put you off your budget, worse make you fall short in your finances and get you into debt.
What Are the Consequences of Not Paying Medical Bills?
Long overdue unpaid medical debt would compel the health care provider to seek the services of a debt collection agency. Unpaid medical bills may lead to a lawsuit against you and hurt your credit report.
What Are My Medical Debt Remedies?
Your current medical condition that needs attention could already bring stress to you. Your medical debt is another stressor which could add up your worries that could worsen your medical state. Whichever way you try to look at the situation, the fact remains that you are in debt and you have to deal with it but your question is why and how. Below are settlement suggestions for your medical debt to help ease your worries:
- Debt Negotiation in Las Vegas and Summerlin: This is also known by other terms like debt reduction or debt resolution, and happens when a large part of your debt is forgiven by your creditor. When the negotiations are finalized, the agreed terms and conditions are put into writing. In most cases, you may pay the agreed upon amount in one lump-sum or pay it over a couple of months. As long as you adhere to your part of the settlement, no outstanding debt will appear in your credit report.
It is advised, however, that you carefully check the accuracy of the medical services that are billed to you before the negotiation process. You have to make sure that you were able to receive all the services as reflected in your medical bill and be keen on fraudulent charges, double billing and coding errors with your insurance company.
- Debt forgiveness in Las Vegas and Summerlin: This happens when an organization buys and abolishes your medical debt. This seems to be a promising option to clear you out of debt. However, there are evaluation measures in place to make sure you are qualified to be granted such a debt forgiveness privilege.
- Debt consolidation: This works by merging all of your medical bills and expenses into one loan that will repay them all off. But this option does not wipe off your debts, in fact, you are still in debt only that you will only do repayment with one creditor as opposed to several creditors.
- Interest-free repayment plan: Nonprofit hospitals typically have a financial aid program especially for those low-income patients in the form of an interest-free repayment plan. You get to repay your medical debt into monthly payments so you can spread medical costs over time. You could check with your medical providers if this is an option that could be taken.
- File for bankruptcy in Las Vegas or Summerlin: This option may be your last recourse as it is true that bankruptcy could wipe out all your debts. However, it may also affect your future loan plans since bankruptcy will stay in your credit report over time.
The Bankruptcy Code allows debtors to pay off or discharge medical debt through Chapter 7 or Chapter 13 bankruptcy.
A Chapter 7 bankruptcy may be the best option for Las Vegas or Summerlin residents who have low income and assets with little to no equity. You do not need to have a certain amount of debt. Medical debt will be eliminated in Chapter 7 bankruptcy, along with the majority of other unsecured debt (debt that isn’t secured by security).
You could file for Chapter 13 bankruptcy in Las Vegas or Summerlin if you don’t meet the requirements for Chapter 7 bankruptcy, or if you own assets that you might lose in a Chapter 7 bankruptcy. You will pay back the percentage of the medical debt you can afford through your repayment plan in Chapter 13 bankruptcy. At the conclusion of the case, the court will discharge (wipe out) the remainder.
Many debtors consider Chapter 7 bankruptcy because medical debt may be discharged if it is not paid off through the liquidation of assets. In Chapter 13 bankruptcy, medical debt is only discharged after debtors have completed a repayment plan, which may address the medical debt or higher priority debts. However, filing Chapter 13 may be advantageous in some cases, since it gives debtors the opportunity to reschedule secured loans and keep certain assets.
Is My Health Insurance Enough to Keep Me Out of Medical Debt?
You may feel secured because you are covered by your medical insurance. While it is true that getting yourself insured is best than not getting insured at all, having one is not a guarantee for immediate out-of-pocket costs when injuries happen and illness is in consideration. Here are some truth to why having health or medical insurance may not be an assurance to keep you out of debt:
- You have to pay a greater share of your bills out-of-pocket through rising deductibles and co-payments;
- You may have been diagnosed with a chronic illness that wipes out your insurance plan in just one costly treatment;
- Your health care provider may not be part of your insurance’s network of providers;
- Your illness or injury may not be covered by your insurance;
- You could not afford a premium insurance plan because of your low income;
- You could not sustain paying for your insurance because of your medical condition (could be that you had to leave work or have been out of work for some time due to your condition); and/or
- You could be denied of your claim
How Long Would My Medical Debt Stay on My Credit Report?
As long as the debt information is true and the account is active, medical debt will continue to appear on your credit report. You can anticipate that negative information will disappear from your credit record seven years after the account is closed. A bankruptcy filing may stay on your credit report for ten years.
On July 1 of this year, a change in the rule happened where medical debt in collections will be removed from your credit report once paid.
Speak with a Medical Debt Bankruptcy Attorney in Las Vegas and Summerlin.
If you have questions about your medical debt resolution options in Las Vegas or Summerlin, contact Freedom Law Firm Bankruptcy attorneys for a free initial consultation by calling (702) 747-6650 or filling out a short intake form online.
Disclaimer: Freedom Law is neither an insurance agency nor a nonprofit organization that buys off debt. Freedom Law is a bankruptcy law firm. This blog post does not offer any legal advice and is published for informational purposes only.