When medical creditors come knocking, consider bankruptcy

Millions of Americans struggle with overwhelming medical debt. It is quite common for families to start crowdfunding pages to get help with medical expenses, to take out personal loans, to max out credit cards and more just to get the bills paid. Sometimes, though, things get to be too much. If you are dealing with seemingly insurmountable medical debt, it might be time to seriously consider a bankruptcy filing.

Why are medical bills so out of control?

There is no simple answer to that question, but there are several factors fueling the sharp, ever-present increase in medical treatment expenses across our country in the past 10-20 years. These include:

• High deductibles (rising an estimated 255 percent since 2006)
• Higher out-of-pocket costs passed along from insurers to patients
• A low nationwide minimum wage (since 2009 the federal minimum wage has remained stagnant at $7.25)
• Higher costs for specialty, life-saving medications like those used to treat diabetes, cancer, anaphylactic reactions and more
• Higher costs of living, particularly in urban centers, which outpace cost-of-living-allowances and wage raises

How can bankruptcy help?

Bankruptcy can put an end to the harassment and hardship associated with out-of-control medical expenses. Once you file for bankruptcy protection, you are subject to an automatic stay that prevents your creditors from taking collection actions for an indefinite amount of time, allowing you room to take a much-needed breath of relief.

A Chapter 7 filing will discharge all your unsecured debt, using the proceeds from liquidation of your non-exempt property as partial payment to your creditors.

A Chapter 13 filing treats debt differently, and is more akin to a reorganization or payment plan. You pay on your debt for a certain period of time (typically between three and five years), after which time remaining debt is discharged.