In the past few years, many in Georgia and across the country have struggled with medical issues that have left them unable to work and scrambling to pay their bills. On top of that, they are helpless to stop the flood of medical debt resulting from emergency room visits, diagnostic tests, hospital stays and prolonged treatments. You may be in this same boat, wondering how you will ever be able to keep your head above water.
In fact, you may seriously be considering filing for bankruptcy. While it may be a small comfort, you are not alone. Some reports show that it is not mortgage payments or credit cards but medical debt that is the most common reason why people seek protection through bankruptcy.
Seeking relief from your medical debt
Crushing medical debt is not on reserve only for those who have no health insurance. The truth is that many who have affordable health insurance premiums also have astronomical deductibles, some reaching tens of thousands of dollars. A catastrophic illness or injury can quickly meet that deductible, which comes out of your pocket. In some cases, insurance may not cover certain treatment options or prescriptions, and this can send your budget into a tailspin.
Medical debt qualifies for bankruptcy, whether it is Chapter 7 or Chapter 13. Chapter 7 requires you to pass a means test to qualify to have your eligible debts discharged. The means test determines whether your income is lower than the state’s median income. If you do not pass the means test, you may try Chapter 13, through which you will repay part of your debts through a payment plan and have the remainder discharged at the end of the plan.
Exhaust all your options first
Before you take steps to file for bankruptcy, you may want to see if your medical creditors are willing to work with you. In many cases, they will agree to work out a reasonable payment plan or even reduce the amount you owe. Additionally, medical accounts are not always as quick to go to collections as some other bills, so you may have more time to work them out.
On the other hand, not all medical creditors are willing to negotiate. If your medical bills are just one part of your overwhelming debt or they are the factor that has pushed your budget over the edge, bankruptcy may be the path to peace of mind and a fresh financial start.