Even what seems like a minor injury can send a family’s finances into a tailspin. From a broken bone to a sports-related concussion, medical bills can quickly spiral out of control leaving people facing mounting debt and financial peril. Fortunately, the Bankruptcy Code exists to help individuals get out from under overwhelming debt and move toward a more stable financial future.
It’s no great secret that the American healthcare system can reach dangerous cost levels very quickly. Depending on the accident, injury or worsening condition, the victim might face:
- Numerous diagnostic procedures
- An extended hospital stay
- Surgery and recovery
- Physical therapy
- Prescription medication
- Home accommodations
Additionally, lost wages due to time spent away from work either healing or caring for an injured loved one can impact financial stability. Unfortunately, all these factors combine to form a whirlwind of debt that might be impossible to escape.
Depending on numerous factors and unique financial circumstances, individuals generally pick either Chapter 7 bankruptcy or Chapter 13 bankruptcy.
- People often refer to Chapter 7 as debt elimination bankruptcy as that is its main function. Here, the process eliminates unsecured debt, including medical debt. Unfortunately, the court might require the liquidation of numerous physical assets to pay as much debt is possible. Debtors might protect certain property through the exemptions process.
- Chapter 13 is more a debt reorganization and repayment process. Over a three- to five-year repayment plan, debtors can pay back an agreed-to percentage of their overall debt. Rather than pay the creditors independently, the debtor pays a bankruptcy trustee who then distributes the money as they see fit. At the end of the successful repayment period, unsecured debt, including medical debt, is eliminated.
In many ways, overwhelming medical debt is frustrating because it is a necessary expense. Individuals are angry because they face financial peril not due to frivolous spending, but a potentially life-saving medical treatment. Fortunately, individuals can seek debt relief through the bankruptcy process. As these decisions are often complex, it is wise to trust the insight of an experienced bankruptcy attorney before making your decision.