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If I Have Overdue Medical Bills, Can I File for Bankruptcy?

July 27th, 2020 at 11:42 am

TX bankrutpcy attorney, TX chapter 7 lawyerThe U.S. has some of the highest medical costs in the world, leaving many patients who visit the emergency room or go to the hospital financially destitute. Even those who have health insurance may find that their coverage is not enough to fully cover their necessary medical treatments. No one can predict the manifestation of serious illnesses or accidental injuries, but you rarely have a valid choice, leaving you to choose between unwanted debt or suffer the possibly fatal consequences. If you find yourself overwhelmed with medical debt, you do have legal options to help you payback the costs overtime or relieve yourself of the costs altogether. Filing for bankruptcy may be your last resort, but it may also be your only chance of moving forward.

“Medical Bankruptcy”

Those whose debt is solely made up of pastdue medical bills may believe that they can file for “medical bankruptcy” and avoid their other assets getting involved in the process. There is no type of bankruptcy known as medical bankruptcy; however, medical bills are a common reason that people file for bankruptcy. Medical debt falls under the same category, known as unsecured debt, as credit card debt, personal loans, old utility bills, and borrowed money from family or friends. Since bankruptcy cases must be equally fair for both the debtor and creditor, you must list all of your debts, personal property, and real estate within your bankruptcy case. There are two ways that most people file for bankruptcy: Chapter 7 and Chapter 13 bankruptcy, both of which have a large impact on your credit score.

Chapter 7 Bankruptcy

Filing for Chapter 7 bankruptcy is often the more desired option since it discharges or forgives all of your debts, not requiring you to pay them back. Any medical debt that you have accumulated can be included in a Chapter 7 bankruptcy claim. The process typically only takes four to six months to complete and grants immediate relief to those filing for this type of bankruptcy. There are a few types of debt that cannot be discharged, such as income taxes and past-due child support or alimony payments. While Chapter 7 is often the most desirable option, since you will not need to pay the debt back, there are strict eligibility requirements. If your household income is lower than the state median income, you are eligible to file Chapter 7 bankruptcy.

Chapter 13 Bankruptcy

This type of bankruptcy extends your timeline for paying back your debts, creating a three to five year payment plan for debtors. Chapter 13 bankruptcy is the common option for those who have a steady income, allowing them to pay off their debts while still having disposable income. The amount owed is dependent upon your debt amount and your income. Depending on your situation, your amount owed could be reduced and you may have your remaining debt discharged at the end of your payment plan. Any missed payments can lead to the seizing of your assets.

Contact a New Braunfels Bankruptcy Attorney

As you can see, there are a number of factors that can contribute to your ability to file for bankruptcy and which type of bankruptcy is best for your situation. It is always advised to speak with a well-seasoned attorney who understands your state’s policies regarding filing for bankruptcy. The Law Offices of Chance M. McGhee has over 20 years of experience assisting Texans overcome their debt difficulties, including those that consist of significant medical costs. Contact our Boerne bankruptcy lawyer at 210-342-3400 to discuss the details of your case during your free consultation.

 

Sources:

https://www.thebalance.com/what-to-know-about-filing-medical-bankruptcy-4159606

https://www.creditkarma.com/advice/i/medical-debt-in-bankruptcies

https://upsolve.org/learn/get-rid-of-medical-bills-in-bankruptcy/

 

Turning Friday the 13th Bad Luck into Good

January 13th, 2017 at 8:00 am

Sometimes life simply dishes out some bad luck. A bad car accident. A serious illness. Bankruptcy turns these lemons of life into lemonade.   


Here’s how bankruptcy can help in these two scenarios.

Bad Car Accident

On Friday the 13th you got into a two-vehicle accident. The evidence shows that it was your fault. You got pretty seriously injured, as did your passenger and the other driver. You don’t have nearly enough insurance coverage for all the claims being thrown at you.

The medical bills and lost wages of the other driver and your passenger add up to tens of thousands of dollars over your coverage limits.

The two vehicles also took out a traffic light and then crashed into a roadside business. The resulting damages amounted to tens of thousands of dollars more of uncovered liability.

You couldn’t work for two months because of your injuries, and that lost income was only partially compensated. So you fell behind on your credit card payments and other debts.

You had health insurance beyond what the auto insurance paid of your own medical bills. But it’s not the greatest insurance so you owe many thousands of dollars in deductibles.

The Chapter 7 Solution

So… with the help of your bankruptcy lawyer you file a Chapter 7 “straight bankruptcy” case.

The accident was caused by your negligence, from your lack of care. Plus you are not being accused of driving under the influence. As long as these are true, all the claims against you arising out of the accident would be “discharged.” They would be legally written off. If everything goes as it should, within about 4 months of filing the Chapter 7 case you would not owe anything to anybody related to the accident.

You’d have a fresh financial start. Your bad luck would have turned into good.

Serious Illness

Out of the blue on Friday the 13th you have a heart attack. You survive but it keeps you in the hospital for a week and off work for three months. You had been living on the financial edge already before. But now you owe a new big bunch of medical bills and are seriously behind on other debts.

So you absolutely have to change your lifestyle. You’d been working way too hard and too many hours, and have to cut way back. So your income has gone way down.

You’re now a couple months behind on both your truck loan and your home mortgage. You are being sued by a collection agency for a bunch of the medical bills.

The Chapter 13 Solution

So… you meet with a bankruptcy lawyer and file a Chapter 13 “adjustment of debts” case. That immediately stops the lawsuit on the medical debts, as well as any pending repossession of your truck or foreclosure of your home.

Your lawyer bases your Chapter 13 monthly plan payment on what you can afford to pay to all of your creditors, beyond your regular mortgage payments. It’s not much, but enough to accomplish what it needs to do:

  • Over a 3-year period you use that money to catch up on our missed mortgage payments.
  • Your plan payments also fund a “cramdown” on your truck loan, reducing the monthly payment and the total you pay until the truck is yours free and clear.
  • Your mortgage lender and truck lender must accept the payments once the bankruptcy court approves the plan. You must also comply with its terms to get its benefits.  
  • Your plan pays all the rest of your debts a few pennies on the dollar during the 3-year period.

At the end of the payment plan to the extent that any of your debts have not paid the remaining amounts are discharged. You’d be caught up on your mortgage, own your truck free and clear, and be debt-free except for the mortgage. Throughout the process you’d have a lot less stress on your heart. Your bad luck would have been turned into good.

 

Pay off Debt and Boost Your Credit with the “One-Two Payment Plan”

July 31st, 2015 at 10:56 am

Texas bankruptcy attorney, debt relief, Texas chapter 7 lawyer,Despite the ominous headlines about the national debt, the percentage of American households that have debt has actually decreased in the last decade, according to the National Census. Still, millions of Americans file for bankruptcy each year due to medical bills, lost employment, and other factors.

If you are facing insurmountable debt, then bankruptcy may be a viable option. There are also alternatives to bankruptcy that can help you manage payments and inch toward financial security. This article will discuss one such method, known as the “one-two payment plan.”

Break Down and Prioritize Your Debt

You might be familiar with the phrase “prioritize your debt,” but this can be a somewhat nebulous piece of advice without a thorough understanding of your current financial state. By carefully examining all of your debts and taking note of balances, interest rates, and payment histories, you will be able to identify which debts to pay first. These are usually the ones with the highest interest rates.

Create a Budget for Paying Debt

After identifying which debts to address first, it is time to create a monthly budget for payments. Often, people mistakenly adjust this budget after paying off their highest priority debt. However, it is critical that you maintain this budget until you have paid off all creditors. This not only will help you pay debts faster, but it will also improve your credit score with a steady history of consistent payments.

When in Doubt, Seek Professional Advice

Although the one-two payment plan can make a significant difference in your financial life, debt can be a difficult hurdle to overcome. In many cases, filing for bankruptcy is an intelligent decision that offers debtors a faster path toward financial stability.

If you would like to learn if you are a good candidate for bankruptcy, contact the Law Offices of Chance M. McGhee for a free initial consultation. As an experienced San Antonio bankruptcy attorney, Mr. McGhee can evaluate your financial situation and provide valuable guidance. To schedule a consultation, call our office today at 210-342-3400.

The Real Number One Reason for Bankruptcy Filings

February 18th, 2015 at 12:13 pm

medical care and bankruptcy, San Antonio bankruptcy lawyerHistorically, filing for bankruptcy was typically not considered an option for many people who found themselves struggling with mounting and uncontrollable debt. The stigma attached to bankruptcy was one of shame and failure. However, over the past decade or so, that stigma began to fade as many people realized that bankruptcy was often the only solution to the financial crisis they found themselves in.

In 2012, over 1.2 million people in this country filed for bankruptcy. Prior studies have shown that the leading causes of bankruptcy are medical expenses, unemployment, unexpected life events, and credit card debt.

But just how much of role do medical expenses play in causing people to have to file for bankruptcy? Is it actually one of the leading reasons as we have been led to believe? Many analysts and studies point to the high price of medical care–not only for people who have no medical insurance–but also for people who do have medical coverage as the number one leading cause. It has been cited as the cause of sixty percent of bankruptcy filings each year. However, this statistic was actually garnered from a 2007 Harvard University study. A recent study reached different a conclusion.

The Center for Consumer Recovery analyzed over 3,000 bankruptcies which were filed in 2012. The research team looked over each bankruptcy petition and credit report of each participant, as well as conducted an interview with each one. They found that medical expenses were not the leading cause of the bankruptcy. Instead, in 78 percent of the study cases, it was debt litigation that resulted in the bankruptcy filing.

Three-fourths of participants shared the common experiences of harassment form collection agencies and debt collection companies, including threats of lawsuits. It was these threats and harassment that forced the decision to finally file for bankruptcy.

If you are being threatened and harassed by creditors, bankruptcy may be the best option for you. Contact an experienced bankruptcy lawyer in San Antonio today for a free consultation.

The Financial Impact of Unpaid Medical Bills

July 10th, 2014 at 9:53 am

Attorney Chance McGhee, health insurance, high deductibles, insurance plans, medical bills, medical debt, medical expenses, San Antonio bankruptcy attorney, unpaid medical billsEvery year people suffer from medical conditions and injuries that leave them with much more than scars. They are also left with insurmountable bills. These bills can quickly pile up over time and become overwhelming. In the end, filing for a Texas bankruptcy may be the best option for financial recovery.

According to a study published by CNBC, almost 2 million people filed for bankruptcy in 2013 as a direct result of unpaid medical bills. And while it is easy to see how this can happen to someone without health insurance, the truth is that it can happen to anyone.

In 2013 nearly 10 million insured American adults had more medical bills from that year than they could pay off. Insurance plans have increasingly high deductibles and leave members with up to $10,000 in out of pocket expenses.

The rise in bankruptcies due to medical debt can be compounded by other issues as well. When an unexpected cost arises, often times people have no other choice but to pay with credit cards. Yet when paid with credit, interest must be taken into account as well, thus making large bills even larger. Consider the following statistics published by the National Patient Advocacy Foundation:

  • Medical expenses are a contributing factor in 62 percent of bankruptcies;
  • In 41.8 percent of cases, the person filing could designate a specific health issue;
  • 54.9 percent of bankruptcy filers specifically cited medical costs as a problem; and
  • 37.8 percent of people stated income loss due to illness as a contributing factor.

Texas bankruptcies, due to medical debt, are on the rise. Medical emergencies are by definition not planned, and therefore it is impossible to allocate finances in advance. If you have accrued significant debt due to unpaid medical bills, it is important to consult with an experienced San Antonio bankruptcy attorney to assess your options. Located in the San Antonio area and serving the surrounding area, the Law Offices of Chance M. McGhee provide all clients with professional bankruptcy services.

Medical Bills & Personal Bankruptcy: An Unfortunate Trend

April 9th, 2014 at 7:00 am

Affordable Care Act, Law Office of Chance McGhee, medical bill debt, medical bills, paying medical bills, personal bankruptcy,Texas bankruptcy attorneyEven though the enrollment deadline for healthcare under the Affordable Care Act just passed, it is clear that medical bills are still a big problem for many Americans. According to NerdWallet, one in every five Americans will have difficulty paying medical bills this year. Medical bills are actually the leading cause of personal bankruptcy filings, once individuals and families have used savings, credit cards, or attempted to refinance their homes.

While around 20 percent of people are struggling with medical bills in one form of another, three out of every five bankruptcies is due to medical bills. In fact, nearly 10 million Americans with year-round healthcare will still be unable to pay their medical bills. Many families look for ways to cut costs, including skipping vital prescription medications. Others will turn to loans, credit cards, or other financing methods. Some of those families, however, will find themselves facing bankruptcy.

One catastrophic medical event can set an individual or family back. An unexpected diagnosis or major accident can lead to many months or years of treatment, racking up bills. Those who are covered by health insurance may overestimate the extent to which their policy will help them, and some may find out too late that they are buried in bills that they can never hope to pay. And even when a good faith effort is made to pay down a selection of bills, it may still be impossible to catch up.

If you have accumulated medical bills and simply cannot afford to pay them, you are not alone. Even with health care coverage in place, many Americans across the country are struggling to pay off medical debts. You do have a way out. You do not have to continue living under the pressure of colossal bills. If you would like a fresh start, contact a Texas bankruptcy attorney today.

Insured Patients and Bankruptcy

October 8th, 2013 at 8:54 am

Many people assume most bankruptcy filings are due to out-of-control spending habits or poor money management.  However, according to a study published in The American Journal of Medicine, one of the biggest reasons people file for bankruptcy is unpaid medical bills.

More surprising is that many who file for bankruptcy due to medical bills have health insurance.  So even with the expansion of health care coverage through the Affordable Care Act, there will still be people struggling under the weight of medical bills.  Understanding the expenses related to health insurance can help you be financially prepared.

 

Monthly Premiums

Unless you have an employer covering your full monthly premium, most people will have to pay at least part of this to have health insurance.  The amount you’ll pay for your monthly premium has many variables, including the amounts set for your deductible, co-payments and co-insurance.

Deductibles

A deductible is the amount of money you must pay before the health insurance company will begin paying benefits. Deductibles range considerably depending on your plan. Many people try to save on their monthly health care premiums by selecting plans with high deductibles.  This can be an effective strategy but a high deductible can be a real challenge if you ever need to pay it.

Co-Payments and Co-Insurance

Once your deductible is met, you may have co-payments and co-insurance to pay.  A co-payment is a specific dollar amount you may be required to pay each time you visit the doctor.  A co-insurance is a percentage of the covered service you may be required to pay.

Lifetime Maximum

Sadly, a serious illness or injury can deplete your health insurance completely, as many health insurance plans have a lifetime maximum.  This means that once your insurer has paid out a specific dollar amount, you no longer have benefits from that company.

What Can I Do?

You should discuss your financial concerns with your doctor.  While you do not want to compromise the quality of your care, sometimes good options are available that are less expensive.  And do not be afraid to shop around.  Look for cheaper prescription drugs and cheaper diagnostic tests.  Finally, discuss payment plans with your doctor’s office.

If you find yourself with mounting medical bills you cannot pay, bankruptcy may be the best option for you.  Contact an experienced Texas bankruptcy attorney today.

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210-342-3400

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