BANKRUPTCY - the word itself can make grown men cower...or worse. The negative connotations are enormous, but in today's world this word is becoming much more commonplace. The fact is that more than half of all bankruptcies filed in the U.S. are the result of medical bills that cannot be paid. Unlike their behavior in the past, doctors, hospitals, clinics, labs and EMS services are actively pursuing lawsuits against people who are unable to pay their bills on time, even if people are attempting to make some sort of payment. It seems that being sick, and as a result, unable to pay your medical bills when THEY want it, has become a crime with the victim being the patient, in both cases. It is clear that until some sort of guidelines are passed in the way of laws, this trend will continue.
So, your options are Chapter 7, Chapter 11 or Chapter 13 relief. Chapter 11 is more frequently utilized by corporate entities, so we won't even talk about that, but one of the other two options are sometimes unavoidable, though a last resort.
Chapter 7 bankruptcies will forgive completely most debts that the average American has. School loans are one example of something that bankruptcy in any form cannot forgive. Chapter 7, even if filed solely due to medical bills, will stay on your credit report for a full 10 years. The up side to this is that often when seeking credit, a letter of explanation will suffice when explaining to a prospective lender the situation surrounding the bankruptcy. Depending upon the lender, less weight may be applied to someone who filed bankruptcy due to medical reasons, though lenders are being much stricter in their lending practices and this is changing as the economy continues to decline. Reaffirming with all of your debtors except the medical entities will go a long ways towards convincing a prospective lender of your viability as a credit risk.
Chapter 13, on the other hand, allows for repayment of a debtor's debts with the protection of the court when it comes to lawsuits and loss of their assets due to the financial situation they find themselves in. Medical bills are able to be repaid through Chapter 13, but as the court gets involved, these bills can be somewhat less than what the original amount was that was owed. Though some may think that ANY bankruptcy is catamount to having leprosy, Chapter 13 only stays on your credit report for 7 years, so is just a little easier to swallow than filing Chapter 7.
If you find yourself struggling with medical bills and the victim of medical agencies or their collection agents who are constantly harassing you and are not willing to make payment arrangements, then you could do much worse than to consider filing bankruptcy.
Many people find that being partially or completely relieved of their debts takes a big load off their shoulders. Once the initial shock wears off, you may find that as the nasty phone calls cease and you are able to afford the necessary prescriptions and not worry about how to rob Simon to pay Paul, filing medical bankruptcy may have been a big blessing in disguise.
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