People end up with high levels of medical debt for a variety of reasons. In some cases, the issue is a lack of insurance. Other times, people have insurance but require uncovered care, such as treatment at an out-of-network hospital. High coinsurance rates and large deductibles can also add up to substantial financial responsibilities for patients who expect their insurance to cover their treatment expenses.
Medical debt can strain people’s budgets. In some cases, it may force them to go to court. Those served with paperwork for a medical debt lawsuit may determine that filing for bankruptcy is the best option available given their circumstances.
Medical collections can be a nightmare
Some hospitals have their own collection departments with multiple full-time professionals whose only job responsibility is to contact patients who owe money and try to talk them into making payments. In some cases, hospitals that attempt to market themselves as patient-centered and community-focused may avoid engaging in direct collection activity to protect their reputations.
Those hospitals might hire outside collection agencies or sell medical debts to them. Those collection companies may become quite aggressive in their attempt to push patients into paying debts. They may deny patients adequate information about the underlying debts and may decide to file lawsuits even in cases where patients with debts make their best effort to comply with a payment plan.
A debt lawsuit related to medical care might result in the courts granting the collection agency or hospital a lien against the patient’s home. Their most valuable resource could then be at risk if they cannot make headway on what they owe. The unfortunate reality is that medical debt often far exceeds what those who require intensive treatment can pay quickly after finishing their medical care.
If creditors decide to take legal action, they often prevail in court. Judges may grant them judgments or liens that lead to worsening financial struggles for the patient. A personal bankruptcy filing can be an effective solution when dealing with insurmountable medical debt and aggressive collection efforts.
The automatic stay prevents collection calls and can lead to the dismissal of pending lawsuits. Medical debts not yet secured by a lien against property are typically eligible for discharge during personal bankruptcy. As much as a patient may want to pay for their treatment, they shouldn’t have to give up their most valuable assets or live in poverty to pay their hospital bills.
Filing bankruptcy as a way to address medical debts can be a wise choice. Those who successfully file for bankruptcy can avoid the worst possible outcomes of aggressive debt collection efforts.
