When you are considering bankruptcy, you may be overwhelmed by a number of different debts. One of the most problematic debts many face recently is medical debt.
Medical expenses are one of the top reasons people consider bankruptcy. One study in 2014 attributed three in five bankruptcies to medical bills. High medical expenses can affect everybody, not just the uninsured. The rise of high deductible plans and prescription costs are forcing more people to take on large debts just to stay healthy.
If you are overburdened by health care costs, consider these three ways to tackle your debts.
1. Get it discharged with Chapter 7 bankruptcy.
Medical expenses are considered to be unsecured debts. Like credit card debt, medical expenses are eligible to be completely or partially discharged under Chapter 7 bankruptcy.
Oftentimes, your medical debt can also result in extra loans and credit card bills, as you struggle to pay for previous health care. Chapter 7 bankruptcy gives you a fresh start, eliminating many of these debts entirely. But it isn’t for everyone – you generally need to fall below a certain income threshold to qualify.
2. Make more manageable payments under Chapter 13 bankruptcy.
Another bankruptcy option is Chapter 13, which reorganizes your debts into a payment plan that lasts three to five years. If you do not pursue Chapter 7 bankruptcy, your medical debt could be consolidated with the rest of your debt into more manageable monthly payments under Chapter 13.
You also may not have to repay all your debts under this form of bankruptcy. Your payments are often calculated based on what you can afford in your budget, with remaining debts at the end of your five-year period being discharged.
3. Negotiate with your hospital/doctor.
If you do not want to pursue any form of bankruptcy, you may still have options. Many hospitals and doctors will negotiate payment options and costs with their patients, in hopes of receiving at least partial payment for their services.
If you can negotiate for a more favorable plan, your medical debts may be less overwhelming. To discuss all your options, it is best to consult with an experienced bankruptcy attorney.