Is Medical Bankruptcy a Real Thing?
Medical bills are the number one reason for bankruptcy in the United States. Multiple studies have shown the in 25% – 50% of bankruptcies, medical debt was significant. However, the answer to the question ‘is medical bankruptcy a real thing?’ is ‘no’. While medical bills are a heavy contributor to personal bankruptcy, it is not its own form of bankruptcy. It is, however, an interesting topic that has reached as far as Washington D.C. and ‘medical bankruptcy’ is a term that is resurfacing as Elizabeth Warren begins her bid for Presidential election in 2020.
What is ‘Medical Bankruptcy’?
This is a concept that was first made famous by a couple of papers written by a group which included Elizabeth Warren in 2005 and in 2009. The papers claim that at least 50% of all bankruptcies were caused by medical debt. A ‘medical bankruptcy’ is one that is linked to substantial medical debt. Many experts have since refuted the accuracy of the claim. However, what cannot be refuted is that medical debt is a major contributor to many bankruptcies.
Can You File for Personal Medical Bankruptcy?
In short, no. There is no legal version of bankruptcy called ‘medical bankruptcy’. In terms of personal bankruptcy, you are mostly limited to chapter 7 and chapter 13 depending on your income limitations. That does not change the fact that debt related to medical expenses is a serious consideration when filing for any type of debt relief. Medical debt is considered ‘unsecured’. This means, just like credit card debt, it can be reduced or even eliminated during the bankruptcy process.
When Should You File for Bankruptcy Due to Medical Debt?
Well, there are many factors that go into the decision:
- Are you behind on medical bill payments?
- Are you missing payments altogether?
- Are you receiving snail mail and phone calls from collectors day and night?
- Are you behind on other bills such as mortgage, credit card, and car loans?
If the answer is ‘yes’ to even half of those questions, it might be time to talk to a professional. In many cases, medical debt is valuable and debt collectors do not give up easily. Harassment from debt collectors does not have to be a way of life for you. Elias Dsouza is a skilled and licensed attorney that is equipped to guide you through any debt settlement process. He can help you determine if bankruptcy or debt settlement is the right answer for you. Contact Elias today for a free consultation.