We have the potential to thrive as a society. Yet, as the contentious political debates rage on, millions of Americans continue to struggle with the rising cost of health care. The New York Times recently quoted outspoken billionaire Warren Buffett, on the topic of tax as an impediment to business, as saying that “medical costs are the tapeworm of American economic competitiveness.” For some families, unforeseen medical expenses are indeed a destructive parasitic force that threatens to consume them financially.
By many estimates, including a study reported by cnbc.com, it’s fair to say that medical debt has reached crisis levels in the United States, with perhaps more than half a million bankruptcies directly attributed to medical debt each year. Is your family dealing with health care expenses that you know you can’t afford to pay off? If you are considering bankruptcy as a means of debt relief, you may be on the right track.
What will bankruptcy do to my medical debt?
A lot. If bankruptcy is appropriate in your case, a Chapter 7 filing can do away with your unsecured medical debt, whether that debt accumulated from an illness, surgery, specialist treatment, tests, or injuries from an accident. The two most common forms of bankruptcy used by consumers are Chapter 7 (often referred to as “liquidation”) and Chapter 13, which is known in relation to the payment plan that it requires.
If you pass the Chapter 7 means test, it is possible to say goodbye to ALL of your medical debt. If Chapter 13 is more advisable in your case — because you don’t qualify for Chapter 7, or you need to keep certain assets — you may still obtain big relief from the efforts of medical collectors.
Is it really that simple? What if I’m not comfortable with bankruptcy? What about my credit?
Bankruptcy is powerful in fighting medical debt, but it’s certainly not simple. Your discomfort with the idea of bankruptcy — which is perfectly legal and has been utilized by multiple U.S. presidents, musical icons and captains of industry, not to mention millions of other people — should be weighed against your discomfort with the stress of crushing debt. Yes, your credit will be affected, for a time, but so will your peace of mind and your cash flow.
Bankruptcy is not for everyone. A decision to file should be made, carefully, with the advice of a knowledgeable attorney. In the Nashville area, a free consultation is available.