Should People with Debt from Medical Bills File for Bankruptcy?

Posted on January 9, 2017 at 12:00pm by
Picture of calculating their domestic bills

It is widely known that medical bills are a major reason people in the United States file for bankruptcy. Even with the passage of the Affordable Care Act, there are still ways to accumulate excessive medical bills. Depending on the situation, people can end up paying far more than their out-of-pocket maximums allow through a process known as balance billing. Chronic illnesses and expensive treatments are other reasons people continue to go into debt from medical bills.

People who default on medical bills may face the following consequences:

  • Wage garnishments: Hospitals or debt collection agencies can seek judgments against former patients who default on medical bills. This may allow them to garnish the wages of former patients.
  • Calls from debt collectors: People who default on medical bills may receive phone calls and letters from collection agencies.
  • Less money for other payments: People struggling to pay medical debt may not have enough money left over for payments on mortgages, credit cards, student loans or vehicles.
  • Lower credit scores: This is a minor consequence (because credit scores are not permanent). However, it still can have an immediate impact on people by making it more difficult to lease an apartment or secure certain types of employment.

There are ways that filing for bankruptcy can offer immediate relief from these consequences. In addition, bankruptcy can also set people on the path to a healthier financial future.

How Can Bankruptcy Help with Debt from Medical Bills?

Medical bills are nonpriority unsecured debts, meaning they can be discharged in Chapter 7 bankruptcy. In addition, Chapter 13 bankruptcy can make monthly payments on medical bills more affordable. Bankruptcy can also halt collection attempts on medical bills, such as wage garnishments and phone calls from collectors.

It is also important to remember there is no such thing as a permanent credit score. Once you file for bankruptcy on your medical bills, it may become easier to start repairing your finances.

The Kansas City bankruptcy attorneys at The Sader Law Firm can help people find solutions for tackling excessive medical debts.