What is Medical Bankruptcy?

In today's economy, it seems like more people are filing for bankruptcy than ever before. There are many causes of bankruptcy, including loss of employment and financial debt due to business. One of the most common reasons for filing for bankruptcy in the United States is medical debt.

Medical bankruptcy is not a legal term; rather, it is a general term that refers to filing for bankruptcy due to medical related debt. This is a major problem in the U.S. that has only increased during the recent recession. Many people mistakenly believe that they will never fall victim to medical bankruptcy because they have health insurance. This is false: in fact, more than half of all bankruptcies filed due to medical debt involve people who had health insurance at the time that they began incurring the medical debt. Thus, it is clear that having health insurance provide a false sense of security for many people.

There are other common misconceptions regarding medical bankruptcy claims. For instance, most people who file for bankruptcy due to medical debt owe less than $5000 in medical bills. The reason that they still choose to file for bankruptcy is that health insurance companies have become more aggressive in recent years about collecting their money. Many people become overwhelmed and are not clear about what their options may be. As a result, they file for medical bankruptcy instead of working out another payment plan.

On the other hand, filing for bankruptcy might be the right option in certain cases. For example, families who owe massive amount of medical debt may not have another choice. However, anyone who is thinking about filing for Chapter 11 bankruptcy must carefully weigh the pros and cons first before making their final decision. Filing for bankruptcy can have long-lasting consequences. It is best to consult a lawyer who specializes in medical bankruptcy in order to make the right choice.

Medical Bankruptcy - A Blessing in Disguise?

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.

How a Chapter 7 Bankruptcy Attorney Can Help You

Filing for bankruptcy can have a bittersweet appeal. It is a final solution to your financial problems, but it can also be a nerve wracking decision because of its finality. Because of the ambiguity of this immense process, a Chapter 7 bankruptcy attorney can prove to a be a helpful addition to your proactive stance against personal debt. The lawyer can even save your home from a foreclosure.
The assistance offered by many legal services can help provide tremendous relief at the very onset of this process. This can include immediate debt relieve and collection intervention, free information on debt consolidation as well as the implementation of a solid plan for credit restoration. They can also provide advice in getting wage garnishment stopped and eliminating embarrassing credit collection calls at your place of business.
This can make the process seem less overwhelming. What can make it a positive process however is the implementation of financial training that will help you avoid having a recurrent financial mess on your hands. A good bankruptcy lawyer typically belongs to a legal team that expresses concern for the future of your finances and in various ways works to ensure that you will get on and stay on the road to financial health.
You want to make certain to choose a seasoned bankruptcy attorney that is familiar to many aspects of bankruptcy laws. This insures you greater protection for the assets that you have. The advice that you get at this stage in the game is crucial and should assure your future security.
Many legal teams offer pro bono or free informational services. This can be online or physical access to numerous documents and programs that assist in credit correction. Your bankruptcy will help you get a handle on the present mess, while the useful educational services of your bankruptcy legal team will assist you in making better future financial decision.
Your consumer debt should not require you to suffer a lifetime of embarrassment and stress. In fact, this can only further enhance the proclivity to make bad financial decisions. Filing for bankruptcy is not necessarily the end of the road; rather it is the beginning of a new financial frame of mind.
Having a Chapter 7 bankruptcy attorney on your team ensures that you will get expert legal advice and instruction. This means that the best plans and methods for dealing with your present circumstances will be used. It also means that you will get the relief of trained caring assistance that can help alleviate the stress of collections and wage garnishments.