Understanding Medical Bankruptcy
Aug 12, 2010 Bankruptcy Medical
Most people are surprised to find that of the estimated $1.5 million bankruptcies that will be filed this year, 62% of them will be the direct result of medical issues. Even more surprising is the fact that of those filing for medical bankruptcy, over 80% actually had medical insurance. Despite this, they managed to rack up medical debts that approach almost $18,000! This is just $9,000 less than the amounts owed by individuals who filed for bankruptcy due to medical reasons that lacked medical insurance.
While $18,000 seems like a small amount of debt to cause a bankruptcy, part of the problem is the aggressive nature of the medical debt collection industry. When you default on a credit card debt, the chances of you being sued are actually quite slim. More likely is that the creditor will work with you to establish some sort of acceptable payment plan.
In contrast, medical debt collectors seem to prefer litigation. They will often file lawsuits in small claims court on amounts so small that most other lenders would have not even bothered. Since most people are not accustomed to dealing with lawsuits, it is no surprise that many people panic and resort to filing for bankruptcy protection.
What is a Medical Bankruptcy
Technically speaking, there is no such thing as a “medical” bankruptcy. The only kinds of personal bankruptcies are Chapter 7 bankruptcy and Chapter 13 bankruptcy. There is no distinction by the cause of a bankruptcy.
Generally speaking, however, a bankruptcy that is classified as medical is any bankruptcy that is filed due to medical reasons. This can be caused by excessive medical bills, or a loss of income due to illness. In some cases, it is even the result of an individual getting a second mortgage to cover their expenses. If medical issues were the direct cause of the bankruptcy, it can be referred to as a medical bankruptcy.
The Medical Bankruptcy Fairness Act of 2008
An act was introduced to Congress in 2008 which if passed, would provide a legal distinction for medical bankruptcies. This Act would exempt $250,000 of home equity for those filing bankruptcy due to medical reasons. It would also eliminate the means test for people filing bankruptcy due to medical conditions. This means that many individuals with medical debts that are now forced into Chapter 13 would be able to file for Chapter 7. The act also offers some relief to caregivers of the seriously ill.
Tags: Bankruptcy Medical
How to Handle Past Due Medical Bills
Jul 28, 2009 Bankruptcy Medical
In this unprecedented erratic economy that we are living in today, you are not alone who is fighting the issue of past due medical bills – there are most others like you. As the accumulation of bills and the total owed amount keeps getting higher and higher, the chances of being able to clear the bills keep getting lesser and lesser. So let’s readily discuss some vital details with regard to clearing the hospital bills.
The first obvious thing that you ought to do is to look through your budget thoroughly. If the mention of the word budget creates questions in your mind, then that’s exactly the reason that you have unpaid bills in the first place because of which they have piled up and entered past due phase.
Preparing a budget is a very simple process of calculating your monthly income along with the expenses and savings to keep a tab on where the money is flowing to.
Get an itemized copy of your total past due medical bills that you owe and go through them quickly in details. The objective of going over these bills is to make sure that you have only been charged for the services that you were provided by the service hospital and nothing else.
Once you know what you owe, the next step is negotiating with the hospital to secure as much forbearance as possible on your total due amount. Try to pass on the the thought that you are assuredly wanting to clear your dues and if they can work with you on the amount, you are willful to make payment instantly.
Lastly, after the negotiations are through, you ought to settle a payment plan for clearing monthly installments on your past due medical bills and ensure that you pay on time.
Tags: Bankruptcy Medical
