Posted on: 3 May 2016
When you find yourself facing a severe or chronic illness, any pre-illness money worries or woes you may have had are often apt to fly out the window (if at least temporarily). You may begin ordering takeout most nights because you don't have the time or ability to cook dinner, or your family could be required to incur thousands of dollars in hotel and dining costs if you are admitted as an inpatient at a medical facility far from home. When coupled with medical bills that may or may not be covered by health insurance, these expenses can be enough to tip even the most financially stable families into debt. What are your options if you've racked up major bills while undergoing treatment? Read on to learn more about how you may be able to decrease the amount of medical debt you owe without bankruptcy, as well as some situations in which filing for Chapter 7 or Chapter 13 bankruptcy protection may be your best option.
What can you do to eliminate debt incurred during a long-term illness or injury?
While suddenly going from being debt-free except a mortgage to owing thousands (or tens of thousands) on credit cards, personal loans, or to a hospital itself can be terrifying, there are always several options that can provide you with some breathing room. Even if debt collectors begin calling you on a daily basis, there are steps you can take to immediately end these calls and begin to put your financial house back in order. It's important not to panic or to avoid the situation, as doing either will only prolong your debt elimination journey.
First, you'll want to gather all the debts you owe (or could potentially owe). This should include estimation of benefits (EOB) statements from your doctor or hospital, credit card statements, and hospital bills. You may also want to run a copy of your and your spouse's credit reports to ensure you're aware of all debts in your name.
If you're already receiving calls from collection agencies or other creditors about the money you owe, you may want to contact a bankruptcy attorney. Even if you eventually choose not to file for bankruptcy protection, your attorney will be able to communicate with creditors on your behalf and help negotiate settlement (or at least stop them from harassing you while you work on a solution). Under the Fair Debt Collection Practices Act (FDCPA), creditors can be prohibited from contacting you about debts upon your request (with a very limited set of exceptions) and may be fined for any violations of these rules.
Your next option will be to pursue settlement with your creditors. In many cases, hospital programs and grants can help defray the costs of certain medical treatment, and you may find that a collection agency is willing to forgive a sizable portion of your debt in exchange for an immediate cash payment. In other situations, your credit may still be good enough to apply for a 0 percent balance transfer credit card, allowing you to transfer higher-interest debt to an interest-free card to prevent your debt from rising while you repay it.
When may declaring bankruptcy be the best option?
If your debts have risen to a level that will make them nearly impossible to repay, or if your illness or injury has left you unable to work and facing an uncertain future income, bankruptcy may be the best option to eliminate these debts and help you get a fresh start. When dealing with multiple unsecured debts and a limited income, a Chapter 7 discharge is generally a better option than a Chapter 13 repayment plan; however, your attorney will be able to explain the differences between these plans in detail and help you determine which makes more sense for your individual financial picture.
For those who do decide to file for bankruptcy, if you follow wise post-bankruptcy debt and credit habits, you should be able to expect to qualify for unsecured loans after only about three years. Although your credit report will report this derogatory mark for longer than that, you'll find that responsible credit usage will quickly help you rebound from a medical bankruptcy. For more information about bankruptcy, you can also visit sites like http://timgeorgelaw.com.Share