When Your Medical Debt Becomes Too Much
What Are Your Options?
When you are facing a medical emergency, the last thing on your mind is the financial implications of hospital stays, medical procedures and treatments. However, once the dust settles and the bills start coming in, you may find yourself facing another kind of crisis.
Can Medical Debt Be Discharged in Bankruptcy?
The short answer is yes; medical debt is considered non-priority unsecured debt and can be discharged in bankruptcy. While you cannot target medical debt in bankruptcy, this process can help lower payments or eliminate the debt altogether.
Understanding Bankruptcy
There are two main types of bankruptcy, including Chapter 7 and Chapter 13. While both types address large debt, the way they work is quite different.
With Chapter 7 bankruptcy, the court considers what you owe and what income and assets you must put toward your debt. With this route, you are likely to have to sell some of your belongings, including property or vehicles, to satisfy your debt. The whole process takes about six months, and in the end, your eligible debts are forgiven. Your credit report reflects the bankruptcy for a decade, making it difficult to get a mortgage, a car loan or a personal loan.
Chapter 13 assesses what you owe, your income, assets and comes up with a repayment plan to make the debt more manageable. In most cases, monthly payments do not exceed 15% of your income. This process can stretch out for years, and certain criteria must be met.
Other Options for Handling Medical Debt
Bankruptcy is an extreme measure that has long-lasting implications on your credit. Fortunately, there are other options for tackling medical debt.
Review Your Bills
Medical bills can be daunting, and if you are like most people, the number you focus on is the total amount you owe. However, auditing your bills and looking for errors such as double charges, fees for services not ordered nor received, can knock hundreds or thousands of dollars off the bill.
Negotiate Costs
In some cases, you may be able to work with your medical provider to get lower costs for services. Some providers have sliding fee schedules for income-qualifying patients, especially those who do not have health insurance.
Investigate Financial Assistance Options
Local agencies such as charities and Community Action Partnerships often have emergency assistance for income-qualifying individuals facing medical debt that they cannot pay.
Talk to Your Medical Provider
Some providers would rather work out an affordable payment plan than send the debt to collections or see it end up in bankruptcy.
Preventing Medical Debt with Nevada Insurance Enrollment
While you cannot always avoid a medical emergency, health insurance can help ensure that your medical bills do not become too much to handle. At Nevada Insurance Enrollment, our health insurance agents help you evaluate your health needs and budget and determine what policies are right for you.
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What is a Prescription Drug Deductible?
In the world of health insurance, “deductible” is a common word. It refers to an amount of money that you pay out of your pocket before the insurance company begins to pay. A prescription deductible is the portion you’d pay first, then after you’ve paid the deductible, you may only have to pay a co-pay when you pick up your medication.
If you are single, you would only have to meet your prescription deductible. If you have two or more people in your family, each member may have to meet their own prescription deductible which could be up to 2 deductibles in the family. A prescription deductible is different and separate from the medical deductible, unless otherwise stated. One deductible is for medical, ie: hospitalization, doctors, etc., and the other deductible is for filling your prescriptions.