The modern American healthcare system is incredible in what it is capable of doing. Individuals with severe trauma such as brain injuries, as well as those with formerly fatal diseases like cancer, can seek care and treatment that can extend their life or even completely resolve their medical issues.
Unfortunately, the more intensive or cutting-edge a treatment is, the more patients may have to pay for it. Some of the most successful, newest cancer drugs, for example, don’t qualify for insurance coverage yet. Patients often have to pay out of pocket or work out billing plans with the hospital or medical practice.
Patients hoping to overcome a serious illness, even those with excellent health care, could find themselves saddled with massive medical debt. The same is true of those who wind up hurt in car crashes or similar traumatic accidents. That medical debt could quickly start to impact your family’s financial stability.
If you can’t pay your medical bills and costs of living, that could be trouble
The higher the total balance your medical debt becomes, the more the hospital or medical provider may expect you to pay toward it each month. What started out as reasonable payments at first could quickly snowball into an unsustainable situation where the minimum payment on your various medical debts is more than all the other combined expenses for your household.
Some people will make the very dangerous decision to tap into their home equity or retirement accounts to pay for medical debt. Doing that could set you up for a lifetime of hardship, as you may struggle to recover from those losses. Bankruptcy may be a better option for those struggling to pay their medical bills.
Both forms of personal bankruptcy can discharge medical debt
The average person will either file Chapter 7 or Chapter 13 bankruptcy. Which one is right for you will vary depending on your current financial circumstances, whether or not you can return to work and the amount of equity in your home and other assets you have. Regardless of which form of bankruptcy you decide to file, it is possible for you to discharge your medical debt in either of them.
In Chapter 7 bankruptcy, provided that the courts grant your discharge, you will no longer have to make any payments on the medical debt you incurred before the discharge date. In Chapter 13 proceedings, you will usually need to repay a portion of those debts for between three and five years before receiving a discharge.
Typically, the best-case scenario for medical bankruptcy involves waiting to file until you have completed treatments so that you don’t incur more debt after your discharge. However, if a creditor attempts to bring a lawsuit against you or you find yourself facing foreclosure or other aggressive collection tactics, filing before you finish treatment may be the best way to resolve the issues you face.