In the U.S., healthcare costs are closing in on the $4 trillion per year mark and leaving many citizens dealing with more debt than they can handle Many people have turned to borrowing money, setting up donation campaigns on sites like GoFundMe, or just plain ignoring the bills because there’s little more they can do right now.

Any debt is hard to face, but when you can’t even cover basic healthcare costs, it can become frustrating and depressing for many. Bankruptcy is usually where people turn to help with major debt, but is it a worthwhile choice for medical debt?

The short answer is yes, you can use bankruptcy to help eliminate medical debts. However, there are several factors to consider before deciding to do so. For those who determine it to be a good choice, several benefits can be found. Read on to learn more about filing bankruptcy for medical debt and if you think you’re ready, reach out to a qualified bankruptcy lawyer to discuss your case.

 

What is Medical Bankruptcy?

There isn’t actually a classification for medical bankruptcy. Instead, medical debt is considered part of your unsecured debt and included in consideration for elimination or reduction through bankruptcy. However, choosing to file bankruptcy is a decision you’ll have to make carefully, as it could impact your housing situation, vehicles, or other debts and credit cards.

Unfortunately, most people who have enough medical debt to consider bankruptcy are usually under financial stress otherwise, so these issues may already be cropping up. The best thing that you can do is to speak with a bankruptcy attorney to review your financial situation and determine the best course of action. The lawyers at Morgan & Morgan offer years of expertise in filing bankruptcy for medical debt in Athens, GA, and throughout the state.

 

Chapter 7 Bankruptcy and Medical Debt

Chapter 7 bankruptcy is the most commonly filed option. It discharges certain types of debt for consumers, including:

• Credit card debt
• Lines of credit
• Installment loans (mortgages, vehicle loans, personal loans, etc.)
• Medical bills
• Some student loans (private, not government-backed)

Qualifying for Chapter 7 requires you to pass a means test to prove that you are in such financial distress that bankruptcy is the best option to help you get back on your feet. The test is simple:

Your reasonable expenses are deducted from your total household income. That resulting total needs to be less than the median income in your state. People who already earn less than the state’s median income don’t need to pass the test. In the rare event that you don’t qualify based on this test, you can talk to a bankruptcy lawyer for further advice and assistance.

For those who qualify, medical bills can be included in the debts to be discharged. This can include unpaid bills, those that have been sent to collections, and bills that have been charged to credit cards or paid for with personal loans.

 

Chapter 13 Bankruptcy and Medical Debt

Instead of discharging debts, Chapter 13 bankruptcy sets you up with a repayment plan that helps you pay off all your debts. The caveat, of course, is that you don’t have to pay them in full. Most people only pay a fraction of what they owe.

This is determined by the court trustee. They will look at your income and expenses to decide what you can actually afford to pay on your debts. If there is more owed on unsecured debts, the difference will be forgiven, or discharged.

Then, each creditor will get a portion of the total amount that you owe. There is a potential risk that providers may choose to refuse treatment after you’ve gone through bankruptcy, but this rarely happens. And in that case, you can always find another provider.

 

The Benefits of Choosing Bankruptcy to Handle Medical Bills in Athens

Whether you end up filing Chapter 7 or 13, you will find that several benefits come from using bankruptcy to get rid of your medical debt. It may take time to rebuild your credit after the fact, but if your debt has gotten to an unmanageable place, you may not have a better option. In addition to the benefits below, reach out to a bankruptcy attorney to discuss your case and find out what unique advantages you might gain from filing bankruptcy for medical debt in Athens, GA.

Reduce or Eliminate What You Owe

In the case of Chapter 7 bankruptcy, your debts will be discharged and you won’t have to pay a thing. If you file Chapter 13, your repayment will usually only be a fraction of the debt you actually owe. So, in either case, there are definite financial benefits. Instead of staring down thousands of dollars in medical bills, you’ll either have a clean slate or manageable payments that can help you get back on track.

Stop Collection Harassment

Collection calls and never-ending bills in the mail can become stressful. Whether it’s an overdue doctor bill for $200 or $20,000 in hospital debt from a major event, it’s intimidating and discouraging all the same. When you can’t pay your bills, they are sometimes sent to collections (yes, even medical bills). Then, collection agencies will take over and their tactics are often even more aggressive.

Once you file for bankruptcy, a stay is issued to all of your creditors. That means that during the bankruptcy process and until a decision is made by the courts, they cannot attempt to collect the debts you owe. This can be a huge relief in and of itself and give you time to figure things out.

Prevent Potential Wage Garnishment

Wage garnishment is not a common practice. It does happen in extreme situations, however, and it’s something to be aware of. Depending on how much debt you have and what type of debt it is, there could be cause for the courts to approve a garnishment of your income. This is rare with medical debts, but when you file bankruptcy, it takes care of all your debts, including the ones affecting your wages.

If it’s tax debt, child support, alimony, or a related debt, it can’t be discharged through bankruptcy, however. Make sure that you have a plan to get those debts back on track after you handle your medical bills and other debts with your bankruptcy filing.

Have a Clean Slate

Next time you go to the doctor’s or the hospital, you can give them your insurance information right off the bat. If you don’t have insurance, you can schedule a meeting with their financial services department (most major hospitals and medical systems have them). This can help you get a “sliding scale” rate for your medical care.

That means you won’t end up with thousands of dollars in bills in the first place. It also means you won’t be judged or hassled by the front desk and administration every time you visit the doctor and they see your unpaid bills in the system. It can even encourage some people to go back to the doctor if they’ve been putting it off because of debt.

Reduce Stress

Financial stress is one of the biggest causes of several conditions and ailments. It’s the reason that people struggle with mental health, and it has even led some people to the edge (and over it). No matter how much we try to say “money isn’t that important,” it really is.

It’s even more stressful when you don’t have enough of it. Having looming medical bills can be anxiety-inducing. It can keep you from going back to the doctor, even if you need to be seen. It can make you feel like you need to take on another job or keep you awake at night worrying about how you’re going to take care of everything.

The moment you choose to file bankruptcy for medical debt, that all stops. You will have a qualified, experienced bankruptcy lawyer on your side to handle everything and you can focus on getting your financial life back on track. Most importantly, you can go to sleep at night not worried about when the collection calls are going to stop.

 

The Importance of Having a Bankruptcy Lawyer in Athens

If you are filing bankruptcy for medical debt in Athens, GA, you need a lawyer that is familiar with the process and experienced in handling these cases specifically. You should take advantage of the free consultation to connect with reputable attorneys in your area and get a feel for whether they’re a good fit. Feel free to ask questions and request proof of their expertise.

When you work with the expert team at Morgan & Morgan, you can trust that you’ll get dedicated assistance with your medical debt bankruptcy from start to finish, no matter how much debt you have or which type of filing is best for your needs. Let us handle the hassles of bankruptcy proceedings while you focus on getting back to your life.

Our family-oriented law firm has been committed to helping people in the Athens area with all of their legal needs for years. We are experts in bankruptcy proceedings, including Georgia laws, federal bankruptcy laws, and getting medical debt discharged through bankruptcy. Contact us now for a free consultation or call 706-843-2905.

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