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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Recent Posts
You Can Still Buy Health Insurance From a Local Agent
The way health insurance is being marketed may give you the wrong impression that Nevada Health Link is the ONLY place to buy health insurance these days, but that is NOT the case. You can continue to buy your health insurance from the same agents and agencies you’ve always bought your health insurance from.
Is Health Insurance Worth The Cost?
If you experience a more extensive medical emergency and require hospitalization, hospital bills may quickly become a burden. A three-day stay, for example, could set you back about $60,000 depending on what tests are ordered and what happens during your stay.
What is Co-Insurance?
Co-insurance means two parties will be paying for the bill. “Co” means joint, mutual, two, or more. The health insurance company will usually pay the larger amount (example 70%) and you as the member will usually pay the lesser amount (example 30%). This would be considered co-insurance 70/30. This (co-insurance) usually happens AFTER the deductible is met.
Health Insurance Coverage Effective Dates
Once you have picked a health insurance policy and paid your first month’s premium, you probably expect your coverage to begin immediately. However, depending on when you enrolled and under what circumstances, you may have several weeks before your health insurance coverage takes effect.