Medical Bills and Bankruptcy

Imagine No Debt

Filing bankruptcy over one big medical bill depends on a few things including whether or not you can handle the bill without filing for bankruptcy.

If you have a good credit score and you decide to file bankruptcy, you score will take a dive. But, if you are unable to pay this bill, you will probably start getting overdue notices in the mail and the doctor or hospital can sue you and obtain a judgement in their favor. These things are not good for your score either. You may even have your wages garnished, which isn’t good for your credit score or your budget.
Other Options Besides Bankruptcy

It may be possible to work out a payment plan with the doctor or hospital. You need to make sure that your health insurance has paid their portion of the bill so you don’t end up paying more than you have to. The doctor or hospital may give you a discount for the portion of the bill that your insurance did not cover or if you didn’t have medical insurance. Check with the billing department that sent you the bill. They may be able to help you.

Another option is to check with the Hospital Care Assurance Program (HCAP). You might be able to qualify for reduced or even free care, depending on your income level. If you are eligible, HCAP will partly or completely cover the cost of services that were medically necessary. Contact the billing office at the hospital for more information.

Thanks to the Affordable Care Act (ACA), hospitals that are non-profit receive federal tax exempt status and might have to be more forgiving to patients who are strapped for cash and are having trouble with their medical bills. Under rules proposed by the IRS, those hospitals are required to provide low-cost or free coverage for people with low incomes. This might be an option for you.
Bankruptcy and Medical Debt

If you can’t work out a payment plan and the billing office is going to pursue you for the money you owe, your credit will take a hit due to the fact that collection activity is displayed on your credit report. If you are sued and they win, your wages could be garnished or other collection efforts could be made. This is a good reason to get rid of the medical bill by filing bankruptcy and getting back on track to financial freedom.

If you don’t make a lot of money and don’t really have any assets, a Chapter 7 bankruptcy may be a good choice. Many people have filed a Chapter 7 bankruptcy on one huge debt, such as a large medical bill. That huge debt will be wiped out with a Chapter 7 and you won’t have to worry anymore.

If you can’t get a Chapter 7, or you have some assets you could possibly lose in a Chapter 7, you may file for a Chapter 13 bankruptcy. With a Chapter 13, you will be required to pay back part of the medical bill through a repayment plan. The rest of what is owed will be discharged.

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