If you are one of the many people who are having difficulty dealing with your medical bills, it may be reassuring to know you are not alone. However, that still does not solve your problem. Consequently, it may be helpful to read the guest post below by Veronica Baxter, a legal assistant to a Philadelphia bankruptcy attorney. Whether you choose to go through bankruptcy or try one of the other strategies she suggests in her guest post, hopefully this article will help you formulate a plan for dealing with your medical debt.
by Veronica Baxter
It is inevitable - unless you have the most expensive, comprehensive medical insurance policy available, you are going to incur some medically-necessary expenses which are not covered by private insurance or Medicare or your health savings account.
What can you do when you cannot pay these bills? This Guide sets forth various options and strategies to manage medical debt in retirement.
Believe it or not, if you visit a multi-doctor practice or a hospital which ostensibly takes your insurance, there will be medical providers within that location who will not accept your insurance. Frequently, people being admitted for medically-necessary procedures receive medical bills thereafter for various services by those not participating in their plan.
Ask questions beforehand. You may be surprised how being aware and checking with your providers will get you more of the services you need performed by practitioners in your plan. Many hospitals have patient advocates who can help with this and, of course, having family by your side helps, too.
For ongoing treatment or annual checkups, primary care physicians may have a coverage plan which one can subscribe to, or a monthly payment plan. And, if a provider knows you are a cash payer, a discount may be available.
Do not be shy. If you do not ask, you will not receive it.
There are two scenarios in which someone should consider filing a bankruptcy petition. As an introduction, here are the two types of bankruptcy available to most consumer debtors, and they are useful for different situations and goals:
Chapter 7 bankruptcy is a four- to six-month process during which you disclose your expenses, income, assets, and debts to the Chapter 7 Trustee and the bankruptcy court. You must pass a “means test” to income-qualify to file under Chapter 7. If all goes well, the debtor has all unsecured debt, including medical bills and credit cards, discharged - meaning the debtor is no longer personally liable for it.
Chapter 13 bankruptcy is for debtors with steady income (for retirees this can be income such as Social Security, a pension, or part-time job) who can afford to partially repay their creditors through a monthly payment plan over three or five years. How much they pay depends on the type of debt they have and the amount of disposable income they have.
This form of bankruptcy is most useful for people who have fallen behind on a car loan or mortgage and want to keep that car or home. They can use their Chapter 13 plan to pay the arrears over time and get caught up.
Again, at the end of the plan, whatever debt is not repaid is discharged. This usually means all or most of the unsecured debt is discharged.
This is first for a reason. Being in collections and subjected to relentless creditor harassment, or receiving a summons, are the most stressful events one can suffer. And we all know how bad stress is for our health. Do you want to stress over old past-due medical bills which could cause you more health problems and then more medical bills? This has to be solved, and quickly.
The minute you file a bankruptcy petition, the automatic stay is in place - meaning, all lawsuits and collection activity stops right then, and remain “stayed” while your bankruptcy case is active.
Consult with an experienced local bankruptcy attorney about your options. Your initial consultation will be free of charge, and you can explore various solutions at no cost or obligation to you.
If you decide to file Chapter 7, it is likely because you income-qualify, are able to apply exemptions to protect your home and other property from seizure by the Chapter 7 trustee, and have medical and credit card bills you cannot pay.
If you decide to file Chapter 13, it could be because you have a steady income and can partially repay your debt, and perhaps you have fallen behind on a car loan or mortgage and want the opportunity to catch up. Chapter 13 is perfect for that.
Your attorney will discuss all options with you and help you decide which is best.
2. Consider Bankruptcy if You Have Medical and Credit Card Debt and No Major Medical Procedures Pending.
If you find you are in relatively good health with no ongoing conditions needing treatment or major procedures planned, and you have outstanding medical bills and perhaps credit card debt you cannot pay, bankruptcy is for you. Whether Chapter 7 or 13 is appropriate will depend upon your income and other financial goals.
If you have an ongoing condition or major procedure planned, you need to discuss your options with your attorney. You do not want to alienate your medical providers by not paying them and getting that debt discharged.
Deciding when to file bankruptcy is tricky if you are filing due to unpaid medical bills.
In the case of other kinds of debt, an attorney would usually recommend filing as soon as possible, before you are sued or, if you have already been sued, before the creditor gets a judgment against you and starts garnishing your wages, levying against your bank accounts, or recording a lien on your property.
Medical bills are different. They can be unpredictable and often bills come weeks or months after a procedure.
The bottom line is that a bankruptcy cannot discharge medical bills which are incurred in the future. So if you have a chronic condition, you need to weigh your current bills with the possibility of future bills and discuss it with your attorney. If you know you need a major procedure, you might want to wait to file bankruptcy until you have recovered from it so the bankruptcy captures all of those bills.
An experienced bankruptcy attorney can help you. Do not suffer. Your medical debt problem can be solved.
About the Author
Veronica Baxter is a legal assistant and blogger living and working in the great city of Philadelphia. She frequently works with David M. Offen, Esq., a Philadelphia bankruptcy attorney. (Ad)
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Disclosure: The owner of this blog does NOT have an affiliate relationship with this bankruptcy attorney and did not receive payment for the publication of this post.
Disclosure: Some articles on this blog may contain Amazon affiliate links. If you decide to make a purchase, I'll make a small commission at no extra cost to you.
If you are interested in learning more about financial planning for retirement, Medicare, Social Security, where to retire, common medical issues as we age or more, use the tabs or pull down menu at the top of this post to find links to hundreds of additional helpful articles.
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Photo credit: Veronica Baxter
Source of statistics: https://www.commonwealthfund.org/publications/newsletter-article/survey-79-million-americans-have-problems-medical-bills-or-debt