What to Do if You Have Medical Debt
If you are having trouble paying off medical debt and think that bankruptcy is your only option, consider looking into other options first, especially if your credit is good. While bankruptcy will likely cause your credit score to drop, it will not last as long as you think. However, if you do not file for bankruptcy and you still do not pay your medical bills, you could find yourself in an even worse situation.
First, you will start receiving late notices. Eventually, the creditor might sue you and get a judgment against you. Then you could face a bank levy, lien against your home, or wage garnishment, and what is worse, you may not be able to reverse some of these consequences by filing for bankruptcy.
Medical treatments are not cheap, and consequently, the high costs associated with medical debt is one of the biggest causes of bankruptcy across the country, including in Georgia. In some situations, even people with insurance can be overwhelmed with debt from medical bills. An experienced debt settlement and bankruptcy attorney like those at Cornwell Law Firm can often help you overcome such difficult financial situations. Below are a few options for handling overwhelming medical bills.
- Double Check Insurance and Billing Errors: Once you receive your medical bill, check it thoroughly for errors. Make sure you were billed for the services you received, and if you think there might be an error, contact the billing department for your provider or the billing company and discuss the possible errors with them. If your insurance company denied a claim for a service that you feel should be covered, contact them to discuss the denial. You have the right to appeal any decisions your insurance company makes.
- Ask for Hospital Financial Assistance: If you are unable to pay for your hospital care, you may be able to qualify for assistance if you meet federal poverty guidelines. Under certain situations, your care may be free, or the cost reduced.
- Negotiate a Payment Plan or Reduction: If you have significant medical bills, but very little debt, a medical provider may be willing to work with you on creating a payment plan. It is possible to ask for a write-down on a medical bill in this situation, as well. This means that you would offer a lesser amount in return for paying the bill all at once rather than through a payment plan.
- Indigent Care in Georgia: In 1990, the state of Georgia implemented a fund that would allow lower-income citizens access to affordable medical care. The program works to provide Medicaid to those in rural areas and to those who are disadvantaged. Depending on your situation, you may qualify for assistance.
- Discharging Medical Debts Through Bankruptcy: Fortunately, medical debt is one of the easiest debts to eliminate during bankruptcy. In most situations, the judge and bankruptcy trustee understand that medical debt is out of the debtor’s control, thus making them more understanding of bankruptcy. In Chapter 7 bankruptcy, medical bills can be completely erased because they are unsecured debt. If you don’t qualify for a Chapter 7 bankruptcy, you will likely be able to make your medical debt more manageable by using Chapter 13 bankruptcy instead. This type of bankruptcy will allow you to set up a payment plan to repay the debt over a period of a few years.
How Medical Debts are Handled in Bankruptcy
When you file for bankruptcy, your debts will be separated into categories. Some types of debts receive priority treatment because they cannot be discharged through bankruptcy. Medical debts are not one of those. Medical debts are usually considered unsecured debts just like credit cards in a bankruptcy. This means they will not receive priority treatment and are usually easily wiped out during bankruptcy.
How Bankruptcy Eliminates Medical Debt
Depending on the type of bankruptcy you qualify for and file, you may be able to eliminate your debts through either Chapter 7 bankruptcy or Chapter 13 bankruptcy.
- Chapter 7 Bankruptcy – When filing a Chapter 7 bankruptcy, your discharge will wipe out all of your unsecured debts including your medical bills. There is not a limit to the amount of medical debt that can be discharged in a Chapter 7 bankruptcy. However, you must qualify to file a Chapter 7 bankruptcy, which means that your disposable income has to be low enough to meet the requirements of the means test.
- Chapter 13 Bankruptcy – In a Chapter 13 bankruptcy, your medical bills will be lumped together with your other unsecured debt for your repayment plan. The amount you pay will be based on your income, nonexempt assets, and expenses. Each creditor will receive a pro-rata portion of the amount you pay towards the debts in your plan. Keep in mind that you will not be eligible for a Chapter 13 bankruptcy if your debts exceed the Chapter 13 debt limits.
Will I Lose My Doctor?
This is one of the most common concerns of discharging medical debt in bankruptcy. They want to know what will happen to the relationship they have with their doctor or other medical providers. It is hard to find a trusted doctor and to lose one to bankruptcy would not be easy. Fortunately, Congress enacted the Emergency Medical Treatment and Active Labor Act that prevents hospitals from refusing patient treatment based on their ability to pay.
However, medical providers, including your primary doctor, can refuse to treat you if you included their debt in your bankruptcy. Most will not take this action, especially hospitals. They understand why you had to file bankruptcy, and most will be willing to keep you as a patient as long as you pay your bills going forward.
Consult with an Experienced Debt Relief Attorney Today
The bankruptcy and debt relief attorneys at Cornwell Law Firm can help you develop a plan to reduce or eliminate your medical debt. Contact us today to schedule a consultation and take the first step to get back on your feet financially.