Today, healthcare in America is more expensive than ever before. Even individuals with good health insurance face thousands or hundreds of thousands of dollars in medical bills. While well visits are unlikely to place an individual in debt, an illness or accident quickly exhausts any financial resources families set apart for medical care.
If you’re facing medical bills you can’t pay, bankruptcy may be a viable option for you. Unlike student loan or tax debt, most medical debt is dischargeable. This means that under a Chapter 7 bankruptcy, these debts could be eliminated.
What Is a Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy is for individuals who meet certain low income requirements or have a high debt to income ratio. Non exempt assets are liquidated and those funds pay the most important debts. Any leftover debts are usually wiped clean. This means that the individual no longer owes these debts, even though they are not paid.
How Medical Bills Can Affect Your Credit
Outstanding medical bills are reported to all three credit bureaus, which has a significant impact on your credit score. Since many medical institutions have many different billing departments, you may have multiple bills for the same visit. Each of these bills is reported on your credit. For example, for an emergency room visit, you will receive separate bills for the ambulance, the hospital, and the emergency room physician. If any diagnostic tests were performed, you may then also have bills for radiology. So for one visit, you could have four or more different bills. All of these bills hurt your credit if you are unable to pay them.
How a Chapter 7 Bankruptcy Can Give You Relief
Many people mistakenly believe that declaring bankruptcy has a worse effect on a credit score than leaving multiple unpaid bills. While a bankruptcy will cause a credit score to fall, it provides a clean slate opportunity for you to build your credit back up. It typically takes much longer for individuals with significant debt to pay it off over time and build their credit score from there than it does after filing for bankruptcy.
At Beecher & Conniff, we can evaluate your medical bills and help you determine if a Chapter 7 bankruptcy could help you escape overwhelming debt. Call today at 253-627-0132.