Our Southfield Lawyers Can
File Bankruptcy for Medical Bills
What is a “Medical Bankruptcy”?
Because of the high cost of medical care, many people with otherwise good credit are forced into filing bankruptcy simply because of medical bill debt. “Medical Bankruptcy” is not actually a legal term – but it is a term commonly used by non-lawyers to describe a situation where unmanageable medical bills are the only (or primary) reason for filing bankruptcy.
So, while filing “Medical Bankruptcy” is not any different from filing bankruptcy for other reasons – it is a very real situation to the people involved. In other words, a “Medical Bankruptcy” is not recognized by the bankruptcy courts as a special category of insolvency. But, while the paperwork and document filing requirements are the same – the emotional impact of a medical bankruptcy may be very different.
In a so-called “medical bankruptcy”, in addition to owing money, the debtor has the emotional and financial stress caused by their own, or their family member’s illness. This can make dealing with insistent creditors overwhelming.
Additionally, medical service providers are often more aggressive about collecting debts than some other creditors. This is especially true once the hospital or medical service provider “sells” your debt to an outside collection agency. Once a collection agency has your debt, they will often stop at nothing – including unscrupulous or frightening tactics – to try and collect your money. Obviously this is because the collection agency only “gets paid” if they collect on your debt.
What Filing Bankruptcy Can Do About Medical Debt
Many medical providers will set up payment plans to satisfy medical bill debt. If you can arrange such a payment plan BEFORE the debt is turned over to a collection agency, you have a much better chance of being able to arrange a manageable payment plan.
For this reason you should never just ignore a medical bill debt – even if you are unable to pay the full amount. Respond to the hospital as early as possible in the collection process – and if you are able to make arrangements always keep up with the payments you have scheduled. Sometimes even a few dollars a month can help prevent your bill from being turned over to an aggressive collection agency.
Some medical providers will also help arrange medical bill loans through specialized medical lenders such as “Care Credit”. Sometimes financial counselors at a hospital and other medical service providers may also suggest a home equity line of credit or other way to borrow money to repay an unanticipated medical bill.
Chapter 7 vs Chapter 13 Bankruptcy & Medical Bills
However, if your medical bill has already been turned over to an aggressive collection agency, a so-called “medical bankruptcy” may be your best option.
In Chapter 7 Bankruptcy you may be able to “wipe out” (discharge) your medical bills completely and get a fresh start – while your home, car and other personal property generally are “exempt” and protected from sale.
If you have a steady income, filing Chapter 13 Bankruptcy allows you to agree to a “Repayment Plan” that will reduce your medical bill payments and repay creditors over a longer period of time – usually three to five years.
In both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy, the medical bill collector’s harassment stops immediately. The minute you file bankruptcy the creditors and collection agencies can no longer contact you and must work through your bankruptcy lawyer and the bankruptcy court.
Our Southfield Bankruptcy Lawyers Can Help You Dismiss Medical Bills
Our experienced bankruptcy lawyers can meet with you to discuss your medical bill situation, and your options for filing “medical bill bankruptcy.” Our Southfield area lawyers have helped hundreds of clients in Macomb, Wayne & Oakland County get out from under big medical bills, and get the fresh start they deserve.