Advances in modern medicine have expanded treatment options for people with a variety of different medical conditions. People now have a better chance of surviving after a cancer diagnosis or major traumatic injuries than they did decades ago.
However, better standards of care mean more training for medical professionals and more equipment at medical facilities. The overall costs of medical treatment have increased significantly. So have the costs that health insurance companies pass on to those in need of medical assistance. Unfortunately, those who need intensive medical care may leave the hospital with bills that they have no way of paying in a timely fashion. Medical debt frequently pushes people into bankruptcy.
Insurance gaps can be massive
Some people understand that they may take on major debt due to medical challenges because they don’t have health insurance. However, the limits on medical coverage mean that even those with decent policies sometimes end up with major unpaid debts.
Some insurance policies don’t cover cutting-edge care. Other insurance policies have high deductibles and coinsurance. People can often budget to cover their deductibles, but coinsurance can leave them with tens of thousands of dollars or even hundreds of thousands of dollars in medical debt. People who have to pay 10% or more of the total cost of their medical care might have no way to cover those costs.
Medical creditors are quick to take legal action
Contrary to what people may expect, medical creditors are not particularly compassionate toward those who fall behind on their financial obligations. Many hospitals and corporate medical practices have in-house collection departments that aggressively pursue patients with past-due balances. Others sell their debts to outside companies that may go so far as to sue an individual who recently required intensive medical care. Personal bankruptcy can help those facing aggressive medical debt collection efforts.
A bankruptcy filing leads to an automatic stay
Creditors usually have to stop calling after an individual files for personal bankruptcy. In fact, they usually need to dismiss any pending collection lawsuits. People facing medical debt often try to work with what they owe until their creditors decide to litigate. At that point, filing for bankruptcy may be the best way to ensure future financial stability.
A bankruptcy filed in response to a creditor lawsuit can protect a patient from wage garnishment or property liens that could leave them struggling financially for years. If the bankruptcy is successful, the courts discharge eligible debts. Unsecured medical debts are typically eligible for discharge in bankruptcy proceedings.
Bankruptcy provides relief from collection activity and a reduction in overall debt. Pursuing personal bankruptcy can be beneficial for someone who has recently finished intensive rehabilitation or been subjected to cancer treatment, etc. They can address their debt and secure a fresh start now that their medical challenges are evolving.
