There are many reasons why medical debt may become overwhelming. Some people lack health insurance when an emergency arises. Others have medical insurance but require treatment while they are out of network.
Even in-network coverage can leave people responsible for thousands of dollars in deductibles and even more in coinsurance costs. When medical debt becomes overwhelming and unsustainable, the patients or parents reviewing their medical bills may need to take immediate action.
Medical creditors are notorious for their aggressive efforts to force people into financial compliance. Without a prompt response, those with medical debt are at risk of creditors placing liens against their homes or attempting to garnish their wages.
What solutions are available to those with substantial medical debt?
Renegotiation with providers
The medical billing process is complex and confusing for the average patient. Hospitals and doctor’s offices set unreasonably high price points for many services and items. They may charge hundreds of times the fair market value for aspirin administered in a hospital, for example.
An attorney familiar with medical billing and debt matters can potentially negotiate on behalf of a patient to reduce the amount actually owed. Health care providers may agree to reduce compensation rates or to partial write-offs that make the debt more sustainable. They may also commit to a payment plan that protects the person with medical debt from aggressive collection efforts.
Filing for personal bankruptcy
Until creditors secure judgments, medical debt is a form of unsecured debt. That makes it eligible for discharge during a bankruptcy case. Individuals with tens of thousands of dollars in debt due to trauma care or surgery not covered by insurance or a high coinsurance obligation can eliminate their medical debt as part of their bankruptcy discharge. That process can be rapid in a Chapter 7 filing or may involve partial payments through a court-overseen repayment plan in a Chapter 13 bankruptcy case.
Discussing different medical debt solutions with an attorney can help people understand their options, including the different types of personal bankruptcy. People facing high levels of medical debt often need to act quickly to avoid aggressive collection efforts that can worsen their financial circumstances.