Should I File for Bankruptcy to Eliminate Medical Debt, Even If I Have Good Credit?
Medical debt is the leading cause of bankruptcy in the U.S. today, affecting people of all ages – and in all financial situations.
It’s never easy to take on medical debt when you’re already struggling with a slew of other money troubles. But what if, until now, your credit has been close to perfect?
Even the most financially responsible Americans – folks who always pay their mortgage, car loan, and credit card bills on time – can become buried in medical bills after an unexpected injury or illness, regardless of whether or not they are insured. Unfortunately, there’s really no way to budget for a health crisis that can cost tens of thousands of dollars or more.
Understandably, consumers with a good credit record and otherwise stable finances may be hesitant to file for bankruptcy to wipe out medical debt. However, bankruptcy could still be your best bet. Ultimately, the path you take to eliminate medical bills should depend on your unique circumstances. What’s most important, however, is that you take action before debt causes lasting damage.
Eliminating Medical Debt Without Bankruptcy
If you’re hoping to avoid bankruptcy, you still have a few options. To start, make sure you’ve received the maximum insurance coverage available in your plan. Next, attempt to negotiate a settlement with the hospital or medical office. If you are uninsured, many medical providers will be willing to discount or waive part of your bill. Depending on your income level, you may also qualify for partially or wholly covered expenses under the Hospital Care Assurance Program (HCAP) or Affordable Care Act (ACA).
Wiping Out Medical Debt with Bankruptcy
But what if medical providers won’t work with you or you earn too much to qualify for assistance? For most people, bankruptcy remains the most effective way to break free from medical debt and regain control of your life.
While it’s true that filing for bankruptcy will lower your credit – at least initially –remember that credit is also impacted by debt. If creditors choose to go after you for payment, the collection activity will show up on your credit report. Just by token of being delinquent on your medical debt, your credit score has likely already taken a serious hit.
Bankruptcy is designed to permanently eliminate debt so you can get your finances – and your credit –back on track. If you earn a modest income and have few significant assets, Chapter 7 can eliminate unsecured debts such as medical debt in entirety within just a few months. If you aren’t eligible for Chapter 7 or would like to protect assets such as a home or car, Chapter 13 bankruptcy makes it possible to repay your debts in manageable installments. At the end of the 3 to 5 year repayment plan, remaining debt will be discharged.
Unlike debt from unaffordable car loans or frivolous credit card bills, medical debt can’t always be avoided. You shouldn’t have to suffer from fees and penalties, creditor harassment, and damaged credit because of medical treatment required by you or your family. Before you default on debt, make sure to explore your options. When negotiation isn’t possible, bankruptcy can help eliminate debt and provide the fresh financial start you need for a full recovery – for you and your finances.
To learn more about bankruptcy and what it can do for your financial situation, contact DebtStoppers today for your free one-on-one debt consultation with an experienced bankruptcy lawyer.