I commonly hear a bankruptcy that discharged medical debts referred to as a “medical bankruptcy.” Today we’ll go over the factors anyone should consider when deciding whether a bankruptcy intended to primarily discharge medical debts is right for them.
- A bankruptcy is a bankruptcy, and the bankruptcy code does not differentiate between a “normal bankruptcy” and a “medical bankruptcy.”
Often, a client will come into my office and say they want to file a medical bankruptcy, and leave out the credit cards or other debt. Unfortunately, and equally fortunately, the bankruptcy code does not allow you to pick and choose what debts you do and do not disclose on your bankruptcy petition. All debts must be listed. Unless an exception to discharge exists, the scheduled debts will be discharged. Truly, a “medical bankruptcy” is just an ordinary bankruptcy with primarily medical debt.
That being said, filing a bankruptcy case almost exclusively to discharge medical debts is very common, particularly in Coeur d’Alene, Post Falls, and Hayden. If you are unable to pay the entirety of your medical debt on time, the hospital will send those debts off to local collection agencies. Our office has experience dealing with these collection agencies and can provide you with advice that works for you. Ignoring the debt is an option, but it is a bad option. The collection agencies may call you, call your family, send you threatening letters, and eventually sue you. If they sue you, they may receive a judgment. With a judgment, they can attempt to garnish your wages. By getting ahead of the judgment, and filing a bankruptcy, we can prevent the garnishment from ever starting. If the garnishment has already started, we can halt it with a bankruptcy filing.
- Prepare a contingency for resolving medical debt accrued after your filing.
Medical debt can be very difficult to deal with. Americans spend 3.8 trillion dollars every year on health spending. In a medical emergency, taking time to determine what the best financial direction to move in is not necessarily something you can prioritize. Part and parcel of filing a bankruptcy to discharge medical debt is also planning to resolve potential future medical debt. Planning includes getting yourself and your family onto health insurance, applying for Medicare or Medicaid, or entering into a medical savings plan. In any case, a bankruptcy can solve a debt problem, but it will not solve ongoing medical expenses. Debts you accrue after your bankruptcy filing are not covered by the discharge, therefore it is imperative that a debtor consider their post-bankruptcy life before they’ve filed.
- Some doctors are not obligated to continue treating you if you discharge their medical debt.
If you have a doctor that you have a long-term relationship with, and you discharge their debt in bankruptcy, the doctor is not obligated to continue treating you. However, a doctor’s refusal to treat someone that discharged their debt is not a problem I have often seen. Most doctors understands when a person is under financial straits and will be glad to continue working with the debtor patient. Other times, the amount discharged is so minimal (often the cost of a co-pay), that the doctor does not think that the small loss should lead to a long-term loss of a patient. As far as risk goes, the likelihood your doctor will drop you over a discharged debt is generally low. Even in the case where that were to happen, finding a new provider after your bankruptcy filing is often a simple task.
At Kootenai Bankruptcy, our experienced attorney can walk you through your debts and assess whether filing a bankruptcy to discharge your medical debts makes sense. We also go over how to mitigate the risks of filing a bankruptcy primarily on medical debt. While we’ve gone over the general rules of what is common to see in a medical bankruptcy, it’s important to review your specific situation with an experienced bankruptcy attorney. Call or text us today at (208) 719-0232 to meet about your bankruptcy case.