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Medical Debt and Bankruptcy

Income Tax LawIf you have medical insurance you probably feel secure. But if you spent a month in the hospital you will have to pay the medical debt from a deductible and the copay’s. For most Kentucky residents this means bankruptcy. The hospital will often sue over the medical debt if it is not paid. Medical debt collectors normally won’t take a reasonable payment. While you are in the hospital you have lost the income from work.

Over 90% of bankruptcy cases are caused by a divorce, disability, job loss or death in the family. And Chapter 7 is often the tool to cure these unsecured debts before they sue and attach the home, wages or bank accounts. If you wait too long such as after they have gotten a judgment, then these debts become secured debts and they own your home.

Medical debts are just one of 4 common outside causes of bankruptcy. You are not the only person that files a bankruptcy over a disability or health problem. It isn’t just the debt from the medical bills, it is also the loss of income. There is no valid reason to blame yourself for an illness. You didn’t plan the medical debt. But many people feel becoming ill or disabled is a failure or their fault.

Bankruptcy is the cure for the disease of debt. Bankruptcy is not the disease of debt. Stuff happens. Sooner or later you get on the wrong road or have a flat tire. Blame, Shame, Guilt and Fear are just emotions which keep you from curing the problems. Bankruptcy provides you will a fresh start on a budget you can afford.

There is no way to foresee or control a medical illness. Sometimes we make poor choices but a medical condition has no relationship to your ability to budget. Instead medical debt is just an unsecured debt that is easily discharged in bankruptcy. A bankruptcy caused by a medical condition is no reflection of any inability to budget.

Which tool for medical debts?

Often an individual will have a long term illness. While you are in this long term illness you don’t just have the current debt but future medical debts that will need to be included in the bankruptcy. By filing a Chapter 13 you can add debts for the coming year or longer. You will incur these debts and a Chapter 13 allows you to add them to the bankruptcy. You may eventually convert it to a Chapter 7 later which discharges the entire debt. If you don’t plan this properly you may be left with debt you didn’t have to repay.

Planning your bankruptcy is essential. Life shouldn’t just happen to you like a train wreck or a deer caught in the headlights. The deer didn’t know which way to turn. It ended up under the truck. That is not where you want to be. Instead planning what is about to happen allows you to keep more property. It is normally far less painful. It is far more like planning your budget so you can keep the important property, while disposing of what you don’t need. It will allow you to live on a new budget that you can afford.