The leading reason why people file for bankruptcy is not unemployment, irresponsible spending, or lax attitudes regarding financial responsibility. Medical debt is the top reason for bankruptcy in 2020. If you are thinking about bankruptcy, speak to an Oklahoma City bankruptcy attorney.
Health insurance does not always cover extensive medical needs. In fact, CNBC reports that in the United States, more than 100 million people are having trouble paying medical debts. Healthcare’s high cost isn’t helping. A stay at most U.S. hospitals costs more than $5,000 a day.
Our medical expenses increase as we get older. In fact, some people over the age of 65 can’t pay off their medical debts even with government assistance and health insurance coverage.
What Are the Effects of High Medical Debt?
Fears over medical debts can have serious and lasting consequences. Surveys indicate that almost one-third of the adults in this country have postponed a doctor’s visit or a surgical procedure because they are worried about accumulating medical debts.
Medical debt is linked to other financial troubles. The Kaiser Family Foundation reports that among consumers whose medical debts are referred to debt collectors, 15 percent owe more than $10,000, 17 percent are in debt to a payday lender, and one in three has student loan debt.
To compound the problem, many who are filing for bankruptcy have recently been – or are now – severely ill or injured. And as a consequence of COVID-19, filings for bankruptcy are likely to rise – in Oklahoma and the other forty-nine states – over the coming months.
What Steps Can You Take?
If your medical expenses are piling up too high, look again to make sure that you have not received duplicate medical bills, and be sure that you actually owe what you’re being charged for.
Frequently, consumers are pursued mistakenly or illegally for medical debts. If the debt has been sold to a debt purchasing business, you might not owe anything to that business, but you should consult an Oklahoma debt defense lawyer.
No Single Option is Right for Everyone
Nevertheless, if you owe medical debts that are overwhelming, bankruptcy is an option, although it is not the only option, and it’s not right for everyone. Sometimes, a payment plan can be worked out with a healthcare provider if you approach that provider before it’s too late.
As your debts increase, your options are fewer, but before you file for bankruptcy, let an Oklahoma City bankruptcy lawyer thoroughly evaluate your income, assets, property, and debts.
What Can Happen If You Ignore Your Medical Debts?
For most Oklahoma consumers struggling with medical costs, bankruptcy should be considered the last resort. Bankruptcy entails some harsh – yet temporary – consequences. But if you do nothing, and your medical debt continues to accumulate, your situation may become even worse.
A healthcare provider could sue you and obtain a judgment. If that happens, your wages may be garnished. A lien may be placed on your property. Filing for bankruptcy prior to a lawsuit can keep a creditor from suing you – or pursuing you – throughout the bankruptcy process.
What Are the Alternatives to Bankruptcy?
If you have good credit, you might be able to resolve your medical debts by working out a payment schedule you can manage. Most healthcare providers and hospitals discount or sometimes waive bills for consumers who pay in cash and/or do not have health insurance.
Many hospitals in Oklahoma offer financial assistance programs. If you owe for hospital bills, contact the hospital, ask for a financial assistance advisor who can tell you more, and apply for assistance if you’re eligible.
But if you can’t have a medical debt resolved, and if a creditor pursues you, the creditor’s action will show up on your credit reports, and your credit will take a serious hit. Nevertheless, if you take timely action, filing for bankruptcy can “discharge” or eliminate your medical debts.
Which Debts Are Not Eliminated by Bankruptcy?
Some debts are non-dischargeable. This means they cannot be eliminated with a bankruptcy filing. The debts that are non-dischargeable include back taxes, student loan payments, child support and alimony debts, and payments ordered by a court or owed to a court.
When you first meet with an Oklahoma bankruptcy attorney, you’ll answer some questions. The answers will indicate whether you qualify to file for bankruptcy under Chapter 7. Your attorney will evaluate your income, assets, property, and debts.
If you are ineligible to file for bankruptcy under Chapter 7, or should you own assets that would be lost in a Chapter 7 filing, you can file for bankruptcy under Chapter 13. If you choose that option, you pay part of your debt during the bankruptcy process. What remains is discharged.
(Chapter 7 and Chapter 13 are both chapters in Title 11 of the U.S. Code, the federal laws of the United States. The Code includes 52 titles. Title 11 is the Bankruptcy Code, the complete federal bankruptcy laws.)
What Else is Required When You File for Bankruptcy?
Whether you file for bankruptcy under Chapter 7 or Chapter 13, you’ll need personalized advice and guidance from an Oklahoma bankruptcy lawyer who has comprehensively reviewed your financial situation.
Federal law also requires anyone who files for bankruptcy to complete a credit counseling course before filing and to complete a financial management course before the bankruptcy process can be concluded.
Bankruptcy may be your best option if you understand the negative consequences of bankruptcy and if you are ready to face those consequences.
What Will Bankruptcy Accomplish?
As mentioned above, older consumers are more likely to have trouble paying medical debts since medical debts increase as we age. For many who are over the age of 65, bankruptcy is the only practical option. If you are working with the right attorney, you won’t have anything to fear.
In the 21st century, bankruptcy leaves no one penniless. Many who file for bankruptcy are allowed to keep their vehicles and homes, and many are able to reestablish their credit quickly after a bankruptcy.
If you have worked, saved, and avoided falling into debt, you could still accumulate overwhelming medical debts because of an unexpected illness or injury. Bankruptcy can give you a clean financial slate – a new start.
If you are overwhelmed by medical debts, now is the time to take decisive action. Contact an Oklahoma City bankruptcy attorney to start the process or to find out more.