Medical expenses such as hospital bills from an accident can suddenly and negatively affect a family’s finances. People with limited income and resources can suffer and end up smothered by debt because of unforeseen expenses. Paying off debts may simply not be possible.
Many Wisconsin residents believe that health is wealth. Sadly, a lack of good health and falling ill or being injured can be very expensive. Although medical debt is often accumulated accidentally or through no fault of the debtor, it is now the leading cause of bankruptcy filing in the United States, topping credit card and mortgage debt.
Insurance can defray only parts of a medical bill: 78 percent of people who file for medical bankruptcy have insurance. Other costs incidental to medical bills may be the reason why so many people file for bankruptcy, according to the co-founder of an online fundraising company.
Medical bankruptcy is similar to personal bankruptcy, and a debtor can file for Chapter 7 or Chapter 13 bankruptcy. A personal bankruptcy filing can be used to eliminate just medical debts rather than mortgage and credit card debt by reaffirmation.
Filing for bankruptcy can affect a person’s credit score, so a debtor should consider negotiating with the hospital or medical institution, ask for help from federal and state entities or seek other avenues to raise funds before filing for insolvency. Discharging medical debt through bankruptcy, though, is a sound option when repayment is not otherwise possible. Also important to consider is the type of debt since not all debts can be eliminate by bankruptcy.
To file for a Chapter 13 bankruptcy or reorganization, a debtor must consider his or her source of income. If eligible, the debtor can file; otherwise, the debtor should consider filing for Chapter 7. Sound financial and legal advice is necessary when considering any debt-relief option. The filer should seek the help of a bankruptcy attorney to ensure the best option.
Source: FOX Business, “Medical Bankruptcies are Still a Problem, Here’s What to Expect,” Donna Fuscaldo, Feb. 18, 2014