Medical debt creates a difficult financial situation for many American families. Filing for bankruptcy could be a solution to mounting hospital bills you cannot pay.
Considering all factors can help you decide whether you should pursue bankruptcy for significant medical debt.
Understanding medical debt
Medical debt can accumulate swiftly, catching you off-guard after an unexpected illness or injury. Even if you have health insurance, you may be responsible for out-of-pocket expenses, deductibles and uncovered treatments.
According to a study by the Kaiser Family Foundation, 11 million Americans have at least $2,000 in medical debt. Another 3 million have more than $10,000 in medical debt.
Assessing the impact
Before delving into the prospect of bankruptcy, fully review the impact of medical debt on your financial well-being. Unpaid medical bills can damage your credit score and lead to aggressive debt collection efforts. However, not all individuals facing medical debt will find bankruptcy to be the most suitable resolution.
Exploring Chapter 7 and Chapter 13
Bankruptcy offers two primary avenues for individuals seeking relief from medical debt: Chapter 7 and Chapter 13. Chapter 7 involves the liquidation of assets to discharge debts. Chapter 13 entails creating a structured repayment plan.
Each chapter has distinct eligibility criteria and implications. You should evaluate these options carefully to see if they align with your circumstances.
Before opting for bankruptcy, you may want to explore alternatives to handling medical debt. For example, you can negotiate with creditors to set up a payment plan or ask healthcare providers about financial assistance programs. Many medical facilities offer help for individuals facing hardship because of medical bills.
Navigating the complexities of medical debt requires a balanced, thoughtful approach. The ultimate goal is to achieve financial stability by managing exorbitant medical expenses.